The real issue with sites like 99designs isn't the quality (though it IS mostly terrible), it's the _consistency_. If you're getting a bunch of different designers to design you something over their lunch break with no interest in or knowledge of your company/goals, you're gonna get something different every time.
Seriously, skip the kids at 99designs and hire a local freelance designer. Maybe you can get lucky and guarantee them [X] number of hours a month in exchange for a lower rate.
you are forgetting that we are talking about a startup here...they can't afford $12K for a designer.
And who cares about consistency..it's just something to use for a few months until the site gets profitable to get someone good. You just don't want something that looks like crap. And you can always just use the one person whose design you picked for more work.
And it's not like you are guaranteed good stuff from a local designer...plenty of them are worse than the "kids" at 99 designs.
I think if you actually screen who you hire you will find someone who cares about their work, is talented, and will understand you are a start up and charge accordingly.
Seriously, skip the kids at 99designs and hire a local freelance designer. Maybe you can get lucky and guarantee them [X] number of hours a month in exchange for a lower rate.