Africa Climbs Aboard Tech Start-Up Money Train As Andela Raises $100 Million

Africa Climbs Aboard Tech Start-Up Money Train As Andela Raises $100 Million

Africa is generally considered to be a frontier market when it comes to the latest technology in the world. If California’s Silicon Valley, London’s Silicon Roundabout and the gleaming towers of East Asia’s big city economic hubs are the world’s tech capitals, Africa has been very much an outpost. But that may now be changing.

The vast continent is often referred to as the global consumer market with the largest untapped potential. And there is a strong argument that the same could be said for the tech sector in Africa. The good news is that the digital economy doesn’t require the same huge infrastructure investment as most of the traditional economy does. Which means many of the barriers that have stymied Africa’s economic growth and development until now do not apply. Or at least not to the same extent.

The tech start-up scene in Africa has been demonstrating promise for some time now. And news that Andela, a company founded as recently as 2014 that trains and then hires out African software engineers, has just successfully closed a $100 million funding round, demonstrates the shoots of that promise are now starting to bloom. The Series D round, backed by Al Gore’s Generation Investment Management as lead investor, takes the total capital raised to date by Andela to $180 million. GIM’s investment philosophy is cornered on the principle of ‘sustainable investment’.

Andela’s success raises hopes that Africa could be beginning to follow India’s lead to establish the kind of thriving, entrepreneurial digital economy that will establish a healthy middle class of professionals with significant earning power. One big advantage of economies like those of many African nations in developing high earning software developers is that the fact the work can be done online means that far fewer subsequently move abroad for employment opportunities than is the case for other highly skilled professionals.

That keeps more earning power and intellect locally, helping develop local economies and the country’s social and political fabric.

Andela is headquartered in Lagos, Nigeria, but also now has offices in Kenya and Uganda as well as in the USA, whose main function is selling the company’s tech skills to the U.S. market. The company recruits the most promising African graduates, mainly, but not exclusively, from computer science degree courses. Recruits embark on a demanding 4-year training programme which takes their earnings from an initial $4000 per annum to typically over $40,000 by the time they are fully qualified.

Companies that hire Andela developers include tech giants such as Microsoft and Alphabet – Google’s parent company and GitHub and Cloudflare. The developers’ salaries are paid by Andela, which then hires them out as contractors. The company profits from the difference in the fees they charge for their time and the salary they are paid, a model common for IT services companies all over the world. With the modern world challenged by a severe shortage of skilled software developers, tech start-ups like Andela that tap into a huge, relatively neglected potential pool of talent could prove to be a significant contribution to the answer.

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