Sydney startup DesignCrowd has raised $10 million in funding as it ramps up investment in its BrandCrowd DIY design offering for small businesses, and takes on Aussie behemoth Canva.
The funding round includes investment from Perennial Value Management, Alium Capital, Ellerston Capital, Regal Funds Management and CVC.
Founded back in 2007, DesignCrowd is a marketplace platform connecting small businesses with freelance designers who can whip up logos, T-shirts, flyers or websites.
Over the past couple of years, the business has been focusing time and investment on its BrandCrowd product, which allows business owners to design their own assets.
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Users can design their own logos, or choose from a library of options to customise, founder and chief Alec Lynch explains. Or, they can take a logo designed through DesignCrowd and use it to create business cards, flyers or visuals to share on social media through BrandCrowd.
In the last financial year, DesignCrowd saw net revenues grow by 54%. That was driven by BrandCrowd, which runs on a subscription model, and is growing at about 100% year-on-year.
Despite what Lynch calls a “rollercoaster year” in 2020, the past 12 months has seen the DIY offering attract more than 5 million sign-ups, with 50% of revenue coming from the US market.
While March and April saw a decline in activity on the platform, as the COVID-19 pandemic swept across the globe, BrandCrowd saw an “interesting and somewhat unexpected” uptick in the second half of 2020, the founder notes.
“Our observation was there appear to be more entrepreneurs starting new businesses,” he tells SmartCompany.
This latest funding will be focused on continuing the momentum BrandCrowd has seen.
The startup will invest in honing its existing product here, and developing new ones. That means hiring more people in its product and engineering teams, and investing heavily in the library of designs available, as well as focusing on marketing.
The unicorn in the room
Of course, there’s already a major player in the DIY design space in Australia, and it may seem like a brave business owner that takes on $8.6 billion tech unicorn Canva at its own game.
But, Lynch isn’t intimidated. Both DesignCrowd and BrandCrowd are laser-focused on providing services to small business owners and entrepreneurs, he says.
And both specialise in logo design. Custom logo design is the most popular offering on DesignCrowd, he notes, and on BrandCrowd, DIY the logo library is the flagship product too.
For small businesses, a logo is one of the most important things to get right. Lynch believes by offering both a DIY capability and access to designers, entrepreneurs get the best of both worlds, and can choose the approach that’s right for them.
“It’s a really interesting market, a strategically important market … and a very large and attractive market,” he says.
“In that market, we’re seeking to be number one in the world.”
IPO on the cards
This is a business that has been around for just over 13 years now, but this funding marks “a new part of the journey”, Lynch says.
Having initially bootstrapped and self-funded for two years, Lynch went on to raise angel funding, then his first chunk VC capital in 2011.
To date, the business has raised more than $22 million in VC funding, including backing from AirTree Ventures and Starfish Ventures.
Each raise has marked a new milestone in DesignCrowd’s journey, Lynch says. And this one is no different.
“The capital raisings have really been rocket fuel to help us rapidly scale the business in general and internationally,” he explains.
“We didn’t need to raise capital, but we could see a number of areas we could accelerate if we were able to invest in them,” he adds.
“That meant it was the right time.”
In the long term, Lynch hints there may be an IPO on the cards.
The investors that contributed to this round specialise in making pre-IPO investments, he says, and having them onboard places DesignCrowd in a good position to consider listing on the ASX at some point.
However, Lynch is in no rush.
“Our focus is going to be on making sure the timing is right for the business,” he says.