Australian founded graphic design marketplace 99designs has just announced the closing of a $10 million Series B round led by Recruit Strategic Partners, the Silicon Valley-based venture capital arm of Japan’s Recruit Holdings Co.
The funding is strategic in nature; 99designs CEO Patrick Llewellyn told Startup Daily that although the company was not actively looking for money, the opportunity aligned well with its current international expansion plans particularly for a move into the Japanese market and other parts of Asia.
“I first met the team at Recruit Strategic Partners at a conference put on by Goldman Sachs. Over time we started to build a relationship and they have been wanting to put money into 99designs for a while now,” says Llewellyn.
“Given our international focus at the moment, having the right partner to enter Japan is going to be very important. If you look at the success they have had with other crowdsource and marketplace businesses, where they really focus on empowering people to go after opportunities and follow their dreams, it is a very similar focus to what we are doing over here at 99designs. We have been doing it for designers and business owners since we first started.”
If the name Recruit Holdings sounds familiar, there might be a reason for that. In 2013, before listing on the ASX, Freelancer was reportedly in discussions with the firm about a potential $400 million plus acquisition offer. That particular deal might not have eventuated for the company, but Recruit has continued to consistently invest in or acquire multiple marketplace style businesses over the past two years as well as staffing solutions companies.
In January this year, the company purchased two Australian recruitment companies, PeopleBank and Chandler McLeod. This makes perfect sense as Recruit actually began as one of the first employment focused marketplaces; and in the last few years, it has been quite aggressive in its mission to become one of the world’s most dominant players in the “matching platforms” space across the verticals of human resources, travel, real estate, bridal and dining.
Over the last few years, investments and acquisitions have been made in some of the most promising tech platforms around the world including Indeed, The CSI Companies, MyTour, Movoto and Quandoo, to name a handful; and the company does not show any signs of slowing down on this rapid expansion.
“Investing in 99designs fits in with Recruit’s goal of becoming the number one company in global matching across multiple sectors,” says Recruit Strategic Partners, President and Managing Director Akihiko Okamoto in a media statement.
“They have helped more than 350,000 businesses launch and grow and paid out more than $110 million to designers around the world. With this investment, we can help them promote their global design platform throughout Asia and beyond”.
Whilst in talks with Recruit, Llewelleyn and his team reached out to existing investors Accel Partners who led a $35 million funding round four years ago. Accel have also participated in this round with venture partner Rob Solomon being appointed to the Board of Directors. Prior to being at Accel, Solomon served as President and COO at Groupon, helping it scale into one of the fastest growing companies ever.
On being asked whether he is seeing a trend on the 99designs platform where smaller agencies are using the service as way for those agencies to have an almost permanent adhoc virtual creative workforce, Llewellyn told Startup Daily that it is a trend they are noticing and talking about. However, he also said that it’s still in its infancy and that it would not be anytime soon that the platform would cater for that structure of service. Given that many of the platforms that Recruit has invested in, have those types of structures in play, it wouldn’t be surprising if we started to see that emerge as a new option or feature in the future.