Australian startup 99designs acquires Brazil’s LogoChef

Australian startup 99designs has continued its international expansion, announcing an acquisition of Brazil’s LogoChef and the launch of a Portuguese version of its website.

The acquisition follows the graphic design marketplace’s entry into Latin America in March with the launch of a Spanish-language version of 99designs in Mexico, Argentina, Columbia and Chile. Last year, 99designs expanded into Europe with the acquisition of Berlin-based 12Designer.

While 99designs has had success abroad, CEO Patrick Llewellyn recommends that new startups initially focus on a single market.

“It really depends a lot on the service or product you are selling, but in general I think it’s important to stay focused and service one market or one language – in other words, English – to prove product, market and fit, and to establish a sustainable business,” Llewellyn told Techworld Australia.

“Going international increases a lot of overheads both technically and organisationally and can slow you down. It should be thought of as a long-term investment that is going to take time and money to execute well.”

After starting in Melbourne, 99designs moved abroad to San Francisco to be closer to its customers, designers, investors and potential strategic partners, Llewellyn said. The company spent its first three years with only an American domain name and accepting payment only in US dollars.

“The United States was always our biggest market and we knew that to expand there we would need a significant on-the-ground presence,” he said. “We opened our San Francisco office in 2010, and a year later took a $35 million Series A round from Accel Partners. We took the funding with the idea that it would enable us to expand aggressively into new international markets and to provided a more localised offering for all our markets.”

The startup expanded to Germany because the country represented its largest non-English speaking market, Llewellyn said. “We already had thousands of customers using 99designs in English, and had a strong feeling that we’d see rapid growth via the introduction of a German-language site.”

By acquiring the staff of 12Designer and through additional hiring in Berlin, the company was able to quickly add websites for other European countries, he said. It also laid groundwork for future international moves, he said.

“We knew that tackling certain key markets, like Latin America and Asia, would present different types of challenges, and launching in Europe first gave us the opportunity to test, iterate, and determine how best to approach these unique markets.”

Llewellyn stressed that 99designs still maintains development in Melbourne.

“We build everything in Australia – nearly our entire dev team is there – and we are investing significantly in our office in Melbourne,” Llewellyn said. “We are big believers in the technical talent that comes out of Australia and believe they can help keep us globally competitive.”

Llewellyn added that the startup ecosystem is the healthiest he’s ever seen it.

“There has been a real explosion in the number of incubators/accelerators and co-working spaces in the major cities around the country and I think the number of people trying to do their own thing or who are interested in working in a startup is at an all-time high,” he said.

“What is really exciting is to see some of the new investment funds that are hitting the market to support startups and technology investing, like Blackbird Capital in Sydney, and to see people like [Internet entrepreneur] Paul Bassett ... actively supporting the ecosystem with a number of different investment vehicles in Melbourne.”

Follow Adam Bender on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

Copyright © 2013 IDG Communications, Inc.

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