Australian startup 99designs just landed $US10 million in investment and is expanding into Japan

(L-R) 99designs CEO Patrick Llewellyn, Recruit Strategic Partners MD
Akihiko Okamoto, 99designs CFO David Kaplan, Recruit senior VP Joe Saijo. Image: Supplied.

Graphic design platform 99designs has landed $US10 million in Series B funding in a round led by Japan-based marketplace company Recruit Holdings and Accel Partners.

President and CEO Patrick Llewellyn, an Australian native who moved to San Francisco back in 2010, told Business Insider the company had identified Japan as the next market it wanted to tackle.

It is seeking to move into broader Asia.

When the company expanded operations in Germany and South America it acquired local companies to establish and localise itself. But recognising the market differences in places like China and Japan, Llewellyn said 99designs decided it needed a partner who was active on the ground.

“If we want to get serious in a market like Japan we need to have a partner who knows the lay of the land,” he said.

“That market is wide enough and now with the support of Recruit we don’t necessarily need to acquire to get into it.”

99designs has already launched a Japanese beta site. Llewellyn said he “wouldn’t discount” acquisition opportunities in the market if they came up.

Recruit was founded in 1960 and today has more than 30,000 employees across the world. It mostly plays in the HR space in Japan but has evolved to participate in platforms across a number of verticals including travel, real estate and dining.

“Investing in 99designs fits in with Recruit’s goal of becoming the number-one company in global matching across multiple sectors,” Recruit Strategic Partners’ President and Managing Director Akihiko Okamoto said.

“With this investment, we can help them promote their global design platform throughout Asia and beyond.”

While Llewellyn said both China and Japan were “pretty daunting”, the company found that despite the language barrier Japan was a simpler market to understand especially when it comes to discretionary income levels, high internet penetration and getting money in or out of the country.

“Japan, while culturally quite different, it felt business wise, easier to understand compared to China,” he said. “China is of real interest but small steps.”

Also contributing to the round was the lead investor for 99designs’ $US35 million Series A back in 2011, Accel, who has also planted Partner and former Yahoo Marketplace boss Rob Solomon, on the 99designs board of directors.

Accel has also previously been involved in Atlassian’s $US60 million investment in 2010, Campaign Monitor’s $US250 million round in 2014 and most recently Xero’s $US100 million round which closed in February.

Llewellyn said the venture firm saw this round as an opportunity to maintain its stake in the business.

Now at 120 people the 99designs team has expanded significantly since Llewellyn joined the business in 2009 when there were just 8 employees.

And while he says 99designs has a fair way to go before it’s that billion dollar business it’s on its way. So far it has paid out $110 million to designers on the platform.

The bulk of the company’s revenue (about 60%) still comes from the US with the remainder coming from international markets including Europe.

“The US is our biggest customer base by a long way,” Llewellyn said.

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