99designs eyes Asian expansion amid $10m funding round

Australian-founded online graphic design marketplace 99designs is eyeing an Asian expansion after receiving $10 million in a Series B funding round from Japan's Recruit Holdings.

The Silicon Valley-based venture capital arm of Japan's Recruit Holdings has pumped $10 million into Australian-founded online graphic design marketplace startup 99designs.

99designs, which is headquartered in San Francisco, announced on Thursday that it had completed the multimillion-dollar Series B funding round from Recruit Strategic Partners, along with plans to use the funds and the resulting strategic partnership with Recruit Holdings to expand further into the Asian market.

"We knew that we would need the right partner to enter Japan and expand our footprint in the broader Asia market," said 99designs CEO Patrick Llewellyn. "Recruit believes crowdsourcing and marketplaces are an important part of the future of work and in empowering people to follow their dreams and find opportunity."

The Series B funding round from Recruit Holdings is much smaller than the $35 million Series A round from US venture capital powerhouse Accel Partners that it was awarded in 2011, but for Llewellyn, the new deal is more about an ongoing strategic partnership than money.

"We weren't that interested in money, and it's only when we came around to thinking about Japan, Asia -- international markets being a really big growth driver for us as a business -- this made sense," Llewellyn told ZDNet. "Recruit [Holdings] has operations throughout Asia, and it's also got operations in Australia."

Llewellyn said that although 99designs still considers North America to be the dominant market in which it operates, it is picking up an increasing volume of work from other regions. The hope is that that the company will eventually divide its business equally between the rest of the world, and North America -- which currently claims around 60 percent of its overall business.

For Llewellyn, Japan seemed like an ideal market from which to ramp up its international profile.

"Japan ... is a $14 billion graphic design and web design market," he said. "It's a big population base, it's got all of the characteristics that we look for -- super-high penetration, and good broadband rates, affluent, strong design culture, strong tech-use culture."

Although 99designs had not been on the hunt for another funding round prior to Recruit Holdings' investment, Llewellyn said the extra cash would be partially used to beef up the company's efforts internationally.

"We still manage to do things relatively lean," he said. "We're operating on three continents with a staff of about 120, so it just gives us the opportunity to increase our efforts there, to continue to invest in marketing to build out our marketplace and find new customers, and obviously to continue to refine our product."

While the company now calls California home, it is continuing to build its engineering team in Melbourne, which now claims around 45 employees. Meanwhile, its San Francisco office has a workforce of around 50 staff members.

"We continually invest ahead of the curve, and then continuing to experiment in different channels," said Llewellyn.