Andela Raises $100 Million to Extend Its Training Mission
January 28, 2019
From all accounts, 2018 was a bumper year for edtech companies on the funding front. Among the many huge wins was an announcement by Byju’s in late 2018 that it had raised $540 million in private equity funding. One month into 2019, there are already strong indications that venture capitalists will continue to invest in edtech over the coming year and may be especially interested in companies with a global reach. On January 23, Andela–a New York-based edtech company that brings tech training to students in Africa–announced that it had raised $100,000 million in a Series D funding round.
Andela, which launched in 2014, aims to train African software developers and place them in jobs around the world. As reported on TechCrunch in 2017, Andela is highly selective about which applicants they accept to their program: “To date, the company has hired 500 developers — which it calls the 0.7% — from its applicant pool of more than 70,000 candidates.” Once accepted, the company not only offers training from one of its hubs in Nigeria, Kenya, Uganda, or Rwanda but also takes care of its trainees along the way. As reported on Tech Crunch:
“Andela pays its employees a minimal salary for the first six months after they join but gives them each a laptop, provides subsidized housing, and offers two meals per-day. That’s in addition to technical and professional skills development, leadership training, and mentorship. The company says it invests $15,000 in each developer during this period.
“After the six months, once developers are promoted and begin client work, Andela says it pays a salary that is competitive within their local tech ecosystem. That goes up to around $2,500/pm in Lagos and around $3,000/pm in Nairobi.”
Since Andela’s trainees don’t pay any tuition, they are required to sign a four-year commitment to Andela, which includes a two-year requirement to work at the company. But so far, most of Andela’s trainees stay well beyond the two-year requirement. According to a recent article in TechCrunch, 98% of the company’s developers choose to keep working for Andela beyond the commitment period.
Another Successful Funding Round
On January 23, Andela announced that it had secured $100 million in a Series D funding round. Generation Investment Management led the funding round. But this isn’t the first time Andela has attracted high-profile investors. Existing Andela investors include the Chan Zuckerberg Initiative, GV, Spark Capital, and CRE Venture Capital. Thanks to its ability to attract investors, the five-year-old company is now estimated to be worth between $600 million and $700 million. But this raises an obvious question: What does Andela plan to do with its latest influx of cash?
According to TechCrunch, Andela will use its new funding to double in size over the coming twelve months. The company plans to hire an additional 1000 developers. It is not clear whether this will entail setting up new training hubs outside the four African nations where the company is already operating.
On Andela’s blog, CEO and Co-founder Jeremy Johnson was a bit more cryptic about what the $100 million might mean for his company. In a post announcing the successful funding round, Johnson opened with an epigraph from sci-fi writer William Gibson that reads, “The future is here, it’s just not very evenly distributed” In his post, Johnson went on to explain:
“We started Andela to chip away at a simple, though seemingly insurmountable, problem. The world needs millions more developers than we currently have.
“Time and again, we’ve seen the leverage created for companies and countries by great engineers. But over the past decade, as the need has become increasingly obvious, the shortage of top-tier technology talent has only become more acute.
“Four years and more than a thousand Andela developers later, the problem feels no less humbling — but it’s also coming into focus. As the war for talent continues, there’s one macro trend that is both enabling Andela’s growth and powering many of the companies that have found a competitive edge: distributed work.”
As Johnson writes in the conclusion to his January 23 post, “The future is here — and it’s not fully distributed — but it will be.” Whatever comes next for Andela, two things appear clear: Its CEO is confident that it is well positioned to drive the future of distributed training and work and several key investors appear to agree.