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Andela raises $40million in Series C financing to aggressively expand, double talent pool

Andela has raised an additional $40 million in a third venture capital funding round, bringing its total capital raise to $80 million. The new investment announced on Tuesday was led by CRE Venture Capital, a South African Venture Capital firm, and backed by DBL Partners, Amplo, Salesforce Ventures, and TLcom Capital. This financing round is likely the largest done by an African VC firm. Spark Capital and the Chan Zuckerberg Initiative were the lead investors in the two previous rounds.

Andela was the first lead investment for the Chan Zuckerberg Initiative, which Mark Zuckerberg and his wife, Priscilla Chan, established in 2015 to invest a significant portion of their Facebook wealth. This additional funding will help Andela fund aggressive expansion plans, including launching two additional offices in other African countries and doubling its developers from 500 to 1,000.

But as Andela is looking to expand its talent pool, the local tech community has pondered on the impact the Andela model might have on the supply of ready talent to local tech businesses. During the period when Andela staff are contracted to the company, which is about 4 years, they would be unable to work in local businesses. They would also be out of the reach of local firms who won’t be able to afford them.

According to some observers, this guzzling of potentially high-quality local tech talent constitutes a form of brain-drain, as cheaper African talent provides a cost-saving and profit-making alternative for overseas tech firms at the expense of local ones, who desperately need affordable tech talent at the nascent stage of the industry. This, according to them, likely poses as an inhibitive factor for the growth of the industry.

But on the flip-side, the Andela initiative has also been hailed mostly because of its emphasis on developing local tech talent, and exposing them to the global stage, where they can gain world-class experience. After this, they can contribute to the local economy. Andela says it spends $15,000 on a developer. Each of them receive a salary, albeit small, while on their 6-month training.

They are also fed twice daily, and provided with subsidized housing. After going through the training, they each receive an Apple computer. According to Andela, after their 4-year stay at the company, its engineers are expected to hop onto other initiatives, either at other companies or their own. An Andela accelerator to nurture start-ups founded by its alumni is being mulled. Some of the companies they are currently being outsourced to, have further expressed a desire to retain Andela staff after their time there.

While Andela engineers are reasonably paid, they don’t receive the entire sum of their post-training worth. Andela bills its clients per worker, and passes some of the revenues to the engineer as salary while keeping the remainder to run itself, as well as recruit and train new engineers.


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