Source – Startup Central
Bangalore-based Jade Magnet Online, an online crowdsourcing marketplace for media and creative services, is in the process of entering the West Asia market through a 60:40 Qatar-based joint venture called Mixilion. The joint venture is currently in the final stages of being formalized. The company has also raised $300,000 in angel funding from a group of local individual investors for Mixilion. This takes the total angel capital raised by the company so far to $600,000.
“The joint venture will be formalized in about 2-3 days. We have decided to go the white label way in this market. Having a local partner is a big advantage in terms of accessing customers,” Jade Magnet co-founder Manik Kinra told StartupCentral in a telephonic conversation. Kinra expects the West Asia market to generate at least $5 million in revenues over the next three years. “The average ticket size of a crowdsourcing project there is higher than in India, at about $300-350 per project,” he said.
The company’s joint venture partners in Mixilion are two individuals who were earlier part of the senior management team at a Qatar-based business process outsourcing (BPO) company. Apart from being partners in Mixilion, they also have their own angel fund. The names of the individuals, the BPO company and the angel fund were not disclosed. “They used to be our clients (while still working at the BPO firm),” said Kinra. The negotiations on the joint venture took about eight months. Once finalized, Mixilion will become Jade Magnet’s vehicle for expanding into markets such as Dubai, Kuwait and Oman.
Kinra co-founded Jade Magnet in 2009 with Sitashwa Srivastava, his MBA buddy from Chennai-based Great Lakes Institute of Management. The platform currently offers over 5,000 independent designers for services such as logo design, website design, animation and brochure design. To access these services, customers need to create an account with Jade Magnet, set up a contest or auction specifying their project and budget, and choose the best design submission. The company is currently processing 115 projects per month and expects to grow to around 300 projects per month by December, following the launch of a new and improved version of the platform. It is currently profitable and expects revenues at $1 million at the end of the current fiscal.
The crowdsourcing business model, especially for creative or design services, is still nascent in India and has not attracted a lot of attention from venture capitalists. The best known global parallel for this business model is Melbourne-headquartered 99designs which raised a $35 million Series A roundof funding last April from Accel Partners and a few angel investors. The company, founded in 2007, currently has nearly 170,000 designers in its community and has paid out over $36 million to designers. By comparison, since its launch, Jade Magnet has paid out $380,000 to designers. “We don’t have the scale yet to attract bigger investors,” says Kinra.
Still, it has been able to access funds periodically. It raised a $200,000 first round of angel funding in October 2009 from Muki Regunathan, founder of Bangalore-based digital agency Pepper Square. Then in 2011, it raised a second angel round worth $100,000 from Eric Papcun, a US-based technology professional currently with Capgemini.
Before the company goes out to raise its next round of funding, the founders are working on scaling up both their operations and market presence. Apart from sourcing projects online, the company is also working through resellers to access customers particularly in the northern part of the country. In April this year, it partnered with Bangalore-based social technology solutions company Kuliza Technologies to offer small and medium enterprises customized websites at Rs 15,000. In terms of operations, it has recently set up a six-member technology team in Allahabad and currently has a total of 21 employees on its rolls.