SoftBank invests $ 200 million in Andela, propels company into unicorn territory – TechCrunch


Andela, a wholly remote firm that helps tech companies build remote engineering teams (of African descent but now a global market), is currently valued at $ 1.5 billion following a cycle of $ 200 million Series E led by SoftBank Vision Fund 2 of SoftBank, the $ 30 billion fund company of the SoftBank group.

New investor Whale Rock and existing investors including Generation Investment Management, Chan Zuckerberg Initiative and Spark Capital have joined SoftBank in investing.

After closing that Series E round, Andela has raised a total of $ 381 million since its inception in Lagos, Nigeria, in 2014, according to data from Crunchbase. Its last valuation of $ 700 million came when the company raised a $ 100 million Series D in 2019.

As part of the investment, Lydia Jett, founding partner of SoftBank Investment Advisers, will join Andela’s board of directors. In a written statement, Jett said that “Hiring remote technical talent is one of the biggest challenges businesses face today, and we believe Andela will become the preferred talent partner for top companies in the world. world, because remote and hybrid working methods are becoming the norm ”.

The company began a global expansion earlier this year after a regional expansion last year during the pandemic. The action coincided with Andela’s entirely remote policy of tapping into a talent pool of over 500,000 engineers in the years to come.

From seven African countries and 37 at the start of global expansion, Andela now has engineers in more than 80 countries, CEO Jeremy Johnson told TechCrunch. It also has a client list of over 200 which includes GitHub, Cloudflare, and ViacomCBS.

For Johnson, working with SoftBank means a greater acceleration of what the company is doing now, especially as the world has become more comfortable working remotely. Andela assesses the technical and general skills of engineers and matches them with the closest teams.

“Remotely, which is why Andela worked in the first place,” he added. “In some ways, it’s also a seal of approval that top tech companies are looking for remote approaches to building engineering teams and sourcing talent. SoftBank and others tell us it’s hard to find tech talent. Andela is getting to push the easy button on it all.

Andela has more than 300 employees and will use the new capital to strengthen that workforce, especially in the areas of products, engineering and growth, Johnson said. In addition, the company invests in growth, continued expansion of technology and product development, and mergers and acquisitions.

While he does not have specific acquisition goals at this time, Johnson said Andela is looking for talent networks to expand geographically or in terms of customer and talent bases, as well as the technology to enable it to better seek and access talent while managing delivery.

“There are a lot of moving parts, so additional technology to do it faster is always interesting,” he added. “In the process, we’re moving towards AI as part of that.”

Earlier this summer, Andela and several of her employees were sued by independent marketplace Toptal. The lawsuit, filed in the New York State Supreme Court, alleges the theft of trade secrets in search of a “perfect clone of his company,” according to the complaint.

The complaint also alleged interference with the contract, unfair competition and the misappropriation of trade secrets.

Despite the allegations, Johnson noted that there had been no movement there. He sees the lawsuit as “the price to pay for doing things that matter” and that it was a tactic to scare off employees.

“If they were serious about the damage they would try to fix it, but they just want it to drag on,” he added.

Although the company has attracted large investors, it has continued to struggle with its business model, including laying off employees in 2019, even after raising $ 100 million in Series D. Its backbone for being a global technology network of its African roots as a talent accelerator was not to find investor favor, but “the journey to find us, similar to the one all startups go through,” Johnson said.

One of the firm’s early investors, Idris Ayo Bello, managing partner of Africa-focused VC LoftyInc Capital, says investors remain optimistic about the company as they know Andela’s impact is growing. will be felt greatly in the years to come, especially when the individuals or developers who have worked in the company come into their own.

“Combining financial returns and human development is no easy task, but they have done it and are just getting started,” he told TechCrunch. “Even as one of the company’s early local investors, we didn’t anticipate the scale of Andela’s impact, as it made people start their own businesses and attract investors. worldwide to support them. “

Most of Andela’s technology still originates from Africa and the company continues to expand in Nigeria, the CEO added. It is less a change there than a “natural business evolution” towards more of a market so that it can grow faster around the world.

The market model is also used in niche regions like Africa, where Andela arguably pioneered the matching of tech talent. Now, tech talent search sites – Gebeya, TalentQL, eWorker, GetDev, among others – are deploying similar tactics but with different business models and operations to match engineering talent with those who need it inside. and outside the continent.

Other platforms like Semicolon and Decagon modified Andela’s previous model to work for themselves and continue to train engineers before launching them into the market.

That said, now that Andela is a unicorn, Johnson sees more competition entering the tech talent space to enable global hiring, but says the company is leading, particularly with a success rate of 96. % in placing engineers where they will be most successful. He doesn’t see Andela competing with Toptal at all, seeing his business as a hiring alternative rather than a market for the gig economy.

This success rate is a testament to the company’s transition to its matching technology and building long-term relationships with customers and talent, he said. In addition, Andela is able to increase her income by 64% on average compared to a previous job as an engineer.

“It’s a significant change, especially when you extend it to thousands of engineers,” Johnson added. “It also changes the economic development of the countries where they live. “

Meanwhile, in addition to expanding to 80 countries, Andela has thousands of developers using its platform and has seen the number of applicants increase fivefold in the past six months. Johnson confirmed in 2019 that his annual turnover rate was $ 50 million, and although he was not specific, he said he is now “so significantly higher than that”.

The next step for the company, it will continue to roll out the design as a vertical, which follows its recent launch of vertical data and Salesforce engineering. They are in addition to verticals in Angular, DevOps, Golang, iOS, Java, Python, QA, React Native, React.js, and Ruby.

Andela is also supporting the expansion to a full digital product suite and the addition of a more diverse skill set to meet its growing business customer base, Johnson said.

“Large companies need a greater diversity of skills on a cohesive basis, and now we are expanding the depth and breadth of our talent supply as companies become more comfortable working remotely. “, he added.

SoftBank’s investment in Andela is its second major investment in a rapid succession in Africa.

The two unicorns, they are joining fintech platforms Flutterwave and Wave as the region’s only billionaire companies starting this year.

In 2016, Africa hit its first unicorn in e-commerce company Jumia (now a publicly traded company) and waited three years later to get another, Interswitch. The continent has already seen four this year, and now has five in total.

With many first-time investors like SoftBank returning to write back-to-back checks and Andela becoming only the second non-fintech unicorn produced on the continent, it’s safe to say Africa is reaching a tipping point.

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