Al Gore’s Firm Leads $100 Million Investment In African Outsourcing Startup Andela
Former U.S. Vice President Al Gore’s investment firm, Generation Investment Management, is leading a $100 million funding round in Andela, a Nigerian tech startup company that outsources African tech talent — mostly to U.S. companies.
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The Generation deal will be the third-largest venture investment ever in an African startup, according to research firm CB Insights. It brings Andela’s venture capital funding to date to $180 million, Bloomberg reported.
Andela’s most famous investor to date is Facebook founder Mark Zuckerberg and his wife Priscilla Chan. A June 2016 Series B round led by the philanthropic Chan Zuckerberg Initiative raised $24 million for Andela. In 2017, CRE Venture Capital led a $40 million Series C round.
The latest and largest round is led by Generation Investment, and it includes participation from existing investors including CRE Venture Capital (with founding partners Pule Taukobong and Pardon Makumbe), Chan Zuckerberg Initiative, GV, and Spark Capital,
Andela’s African computer programmers work remotely for Mostly U.S. corporations. Andela identifies, recruits and develops African software developers to help companies scale with high-performing teams. The company was founded in Nigeria in 2013 and expanded to Kenya, Uganda, and Rwanda. It has about 1,100 staff developers working for more than 200 companies — about 90 percent of them in the U.S.
Andela accepts about 1 percent of applicants. That’s less than “even the pickiest American universities,” according to Bloomberg.
With the new infusion of funding, Andela is projected to double in size, hiring another 1,000 software developers and investing in data, engineering, and product development, according to the Guardian.
With a focus on environmental sustainability, “Generation’s interest in Andela parallels (Chan Zuckerberg Initiative’s),” Bloomberg reported. The bonus, it says, is that large-scale remote work could help reduce greenhouse gas emissions.
Remote collaboration and allowing people not to get on planes, have carbon benefits, said Lilly Wollman, who led the Andela investment at Generation. She expects Andela to place 10,000 developers with clients in the next several years. “The global demand for software engineers far exceeds supply, and that gap is projected to widen,” Wollman said.
“It’s increasingly clear that the future of work will be distributed, in part due to the severe shortage of engineering talent,” said Andela co-founder and CEO Jeremy Johnson. “Given our access to incredible talent across Africa, as well as what we’ve learned from scaling hundreds of engineering teams around the world, Andela is able to provide the talent and the technology to power high-performing teams and help companies adopt the distributed model faster.”
Andela distances itself from the classic outsourcing model that has created resentment for multibillion-dollar Indian staffing firms such as Infosys Ltd., Wipro Ltd., and Tech Mahindra Ltd., Bloomberg reported.
Andela aims to compete more on quality than on price. Its developers are more tightly integrated into the operations of their clients than traditional offshore workers, and hired for a set period of time rather than specific projects, according to Johnson.
But there are still critics who say that a Nigerian success story was erased with the arrival of Zuckerberg money. “Now that the validation of Andela as a success is going global, Lagos has been reduced to one of the campuses of (a) New York-based startup,” wrote Oo Nwoye, a prominent Nigerian entrepreneur, in a 2016 essay.
Still, Andela was voted Best Place to Work in Africa in 2018 and the Wall Street Journal named it one of 25 tech companies to watch. In 2017, Fast Company ranked Andela Most Innovative Company in Africa.
How Andela started
The idea for Andela started with a Nigerian online education startup called Fora, according to Bloomberg:
“Iyinoluwa Aboyeji, one of Fora’s founders, said the company was struggling to raise capital. So they reached out to Johnson, whose own company, 2U, was based on a similar idea. At a meeting in New York, the group came up with the rough idea for Andela. Aboyeji returned to Lagos to start the company in a vacant duplex that an acquaintance let them use for free. Johnson initially intended to be an investor and board member, but soon ended up becoming the startup’s CEO instead. Aboyeji left Andela in 2016.