99designs buys LogoChef, aims for Portuguese design domination

Still riding on its success and the $35 million investment from Accel, 99designs has been able to use its clout to buy up rival design company LogoChef in Brazil.
Written by Michael Lee, Contributor

Australian-born startup 99designs continues on its journey of expanding globally, now acquiring LogoChef in Brazil.

In August 2012, 99designs purchased German-based firm 12Designer for an undisclosed sum. 12Designer continues to operate today as a stand-alone business, headed up by the existing CEO Eva Missling. However, it is a different story for LogoChef.

With 99designs now launching a Portuguese version of its site, LogoChef will be closing its doors to the local market and redirecting traffic to its new parent company.

A spokesperson for the company told ZDNet that earlier this week, LogoChef had already stopped accepting new customers, and that once all of the active contests on the site are completed, LogoChef's site would shut down.

LogoChef co-founder Dan Strougo has been given the role of country manager for Brazil within the 99designs family, and will oversee its progress from its Rio de Janeiro office.

Strougo saw the acquisition as a positive thing for existing LogoChef customers, rather than leaving the market with a gap.

"Joining forces offers LogoChef designers and customers a wide range of new benefits and opportunities. Customers now have access to 99designs' extensive global designer community, including a strong group of designers here in Brazil, and designers have the opportunity to work with tens of thousands of additional potential clients," he said in a statement.

He also said that he had strived to make LogoChef more of a business like 99designs, holding it as the benchmark to aim for.

99designs CEO Patrick Llewellyn threw his confidence behind Strougo as the right person to look after its operations in the country.

"Dan's experience in our industry, gleaned not only through building a successful marketplace, but also as a long-time graphic designer himself, makes him a perfect fit for growing our Brazilian business," he said.

Llewellyn previously told ZDNet that the existence of competitors like Sydney-based DesignCrowd validates its business model. When the two companies simultaneously targeted the UK market in February 2012, neither took a scarcity approach to their niche. Instead, both saw a huge amount of opportunity, even with the friendly competition. At the time, Llewellyn wished his Sydney-based rival well, saying that there was room for all.

Unlike DesignCrowd, which raised AU$3 million from Australian investors, 99designs has had far more capital to enable it to snap up other companies. In 2011, 99designs picked up $35 million from Accel Venture Partners.

Some have pointed to Accel's example as a promise of what might come out of the Australian startup market. The US VC has so far seen massive returns on its investments, with it taking $60 million and $70 million to $100 million bets on Atlassian Software and OzForex.

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