Andela: Is Africa’s Newest Unicorn The Antithesis Of A Surly TopTal?

In the fifteen or so years between the early 2000s when the first seeds of Africa’s nascent but increasingly active tech industry were being sowed and the year 2016, only one Africa-focused, privately-owned tech company managed to hit a USD 1 Bn valuation. Jumia was that unicorn.

In the five years since Jumia first scored that landmark, no less than six more African tech unicorns have sprung up, four of which have been recorded this year alone. And today, Andela, a company that now does the business of helping remote freelancers fill tech jobs globally, became the continent’s latest tech company worth over USD 1 Bn.

With the announcement of Andela’s USD 200 Mn Series E round led by Softbank Vision Fund 2, the talent company is now valued at USD 1.5 Bn.

Per the press release seen by WeeTracker, Andela plans to “continue to expand its talent offering beyond software development to include new verticals such as design and data after launching Salesforce development earlier this year.”

Of course, this is a momentous occasion for so many reasons and it underlines the company’s ambitions as it chases its new goal of helping companies set up remote but robust engineering teams by finding better talent faster, according to CEO, Jeremy Johnson. But it can’t be missed that Andela may have also laid down a marker.

For one, Andela – as it chases new conquests beyond software development – now seems even more primed to spar with its unofficial foe, TopTal; one of the world’s most popular on-demand talent networks which just happens to have no love lost for Andela given that it (TopTal) sued Andela in June this year.

Launched in 2014 through the efforts of Jeremy Johnson, Iyinoluwa Aboyeji, Nadayar Enegesi, Brice Nkengsa, Christina Sass, and Ian Carnevale, Andela gained prominence as the most-coveted platform for training and outsourcing African engineering talents.

Under its previous business model, Andela operated with physical campuses in Kenya, Nigeria, Rwanda and Uganda where it sourced, vetted, trained, housed, and employed identified talents, who are eventually placed for work at global tech firms, under special earnings agreements.

However, Andela ran into trouble with this model such that it had a large roster of junior engineers whose skill level didn’t match market demand. As a result, Andela had to lay off hundreds of engineers and employees starting from 2019.

After testing satellite models in Egypt and Ghana, the talent company decided to ditch physical hubs and go fully remote. It also retired the full-time employment structure for talents and became a platform for freelance engineers around the globe.

Andela says these changes have helped it build a network that today represents engineers from more than 80 countries and six continents. The company also claims thousands of engineers have been placed with leading technology companies including Github, Cloudflare and ViacomCBS. However, the changes Andela made to its business also saw it emerge as a direct competitor to TopTal which didn’t like that one bit, it seems.

Toptal was co-founded by CEO Taso Du Val in 2010 and the company matches skilled tech personnel like engineers, software developers, designers, finance experts and product managers to clients across the globe. According to company data, it currently serves over 1,000 clients in more than 10 countries. Its revenues run into hundreds of millions of dollars.

In June, TechCrunch reported that TopTal had filed a lawsuit in the Supreme Court of the State of New York against Andela and seven Andela employees who used to work at TopTal, alleging the theft of trade secrets in pursuit of “a perfect clone of its [TopTal’s] business”, according to the complaint.

“Until recently, Andela operated an outsourcing operation focused on in-person, on-site hubs in Africa,” Toptal notes in the complaint. “Over the course of the past year, Andela has moved away from its prior focus on in-person hubs situated in Africa and is engaging in a barely disguised attempt to become a clone of Toptal.”

In response to the lawsuit, Johnson told TechCrunch that the lawsuit is frivolous and also alluded to reported cases of a fractious work environment at TopTal.

“This is the kind of baseless bullying and fear tactics that make employees want to leave in the first place. We will defend ourselves and our colleagues vigorously,” he said. There have been no further updates around the lawsuit since then.

Even as TopTal and Andela have many things in common with regard to their business operations and valuation, the pair appear to be the antithesis of each other in certain ways. For one, TopTal hasn’t raised any funding since raising a USD 1.4 Mn via convertible notes in 2012. Its unconventional approach makes it one of the few companies in Silicon Valley that do not issue stock options to its investors or employees. That’s because stakeholders all received convertible notes, which granted them equity if and only if Toptal raised more money in the future. 

“The company hasn’t needed to secure additional capital because of its profitability and growing revenue (USD 200 Mn annually as of 2018, per The Information). So investors are stuck in limbo — as are employees who joined hoping that the company would raise money down the line so their stock options would convert,” reports TechCrunch.

There also appears to be a hint of disillusionment and dissatisfaction among employees who feel deprived of stock in a company that is reportedly worth over USD 1 Bn, at least according to Du Val.

On its part, Andela’s unicorn-making Series E round brings its total funding to USD 381 Mn and it appears to be in the ascendency being that it carries none of the polarising sentiments surrounding its rival. It has also managed to poach some of TopTal’s key persons, including Sachin Bhagwata, Vice-President of Enterprise; Martin Chikilian, Head of Talent Operations; Courtney Machi, Vice-President of Product; and Alvaro Oliveira, Executive Vice-President of Talent Operations.

With a fresh USD 200 Mn in its coffers and the backing of some of the most revered investors in the global tech industry, the next chapter of the Andela-TopTal rivalry might just turn out to be the stuff of Wondery’s Business Wars.