The South African tech talent market OfferZen is one of the beneficiaries of the growing global demand for tech workers: it confirmed to TechCrunch that it had raised 4.5 million euros ($ 5.07 million) in Series A financing from South African investment firm Base Capital.
This is the first fundraising for OfferZen since Philip Joubert, Malan Joubert and Brett Jones founded the company in 2015.
As a marketplace for technology talent, OfferZen allows software developers and engineers to register as candidates who are then selected by OfferZen and made available to companies. The developers are live in the marketplace for four weeks, during which OfferZen guarantees that they will be contacted by different companies. Developers are only allowed to work in permanent positions, the company said.
OfferZen operated uniquely in South Africa for four and a half years until April 2020, when it expanded to the Netherlands after acquiring an Amsterdam-based recruiting tech startup called TryCatch.
According to OfferZen CEO Philip Joubert, more than 1,000 companies and 100,000 software developers are using the tech talent marketplace. Most of its customers from both sides of the market are based in South Africa, the Netherlands and parts of Europe like the UK and Germany, which are leading hubs for global talent.
Expansion into the Netherlands and servicing parts of Europe has been a big contributor to the success of OfferZen growth in the second half of this year, with a 29% increase in placements between Q3 and Q4 alone.
“The hiring of technicians almost stopped in the first half of 2020 due to COVID. Since, Nevertheless, we have seen a huge acceleration in the market: companies are now raising much more capital than they were before the pandemic, investing more in technology and then hire much faster, ”the CEO said in a statement.
“Access to the best tech talent has become the bottleneck for many companies and we are able to help companies solve this problem.. “
OfferZen does to employ revenue sharing agreements, a revenue model adopted by tech talent companies like Bloom Institute of Technology (formerly Lambda School), or hourly rates, like Andela and Toptal. Instead, the South African tech talent company only makes money from companies through two models.
The first is a pay-per-placement model with a one-time fee of 12.5% of the developer’s first salary. So, for example, if a company hires a developer for $ 100,000, it pays OfferZen $ 12,500 in commission.
The second model is an annual subscription offer for companies that hire many developers at a time, paying up front for OfferZen services. OfferZen says this model accounts for 40% of its revenue, while the rest comes from the pay-on-hire model.
Regarding the competition, Joubert mentioned that what sets OfferZen apart from players like Honeypot and Talent.io is how much the company is focused on building an engaged developer community through events. and various channels as well as its procurement process.
“We have a strong user base with very high quality developers in our developer community. So we are very, very well known [and] we invest a lot in the community, ”he said.
“We also simplify the procurement process. So we obviously having a lot of candidates on our platform, which is good, but companies also want to find the most relevant candidates. And so we have a sophisticated match engine that shows the most relevant candidates for the positions that companies are hiring for now.
The company said most of the new funding will go into the OfferZen tech community. Additionally, as OfferZen deepens its expansion in Europe into two more countries next year, some of the money will go to growing its operations, product and growth teams.
When the Joubert brothers and Jones first conceived the idea for OfferZen, they all lived in Silicon Valley, working as software developers. And although they had friends with similar professions in Africa, they realized that the opportunity was not democratized.
“We had a bunch of friends in South Africa who were very smart as developers, but they weren’t working in big companies. necessarily. And the reason they didn’t was that they, I guess, [had] too many obstacles to obtaining a really great job where they were, ”said the CEO.
OfferZen connects developers to various local and global businesses such as Luno, ABSA, MMI Holdings, Takealot, WeTransfer, Adyen, and Catawiki.
Prior to this increase, OfferZen started with the founders’ money. She chose to raise money now because she needed venture capital to expand into more European territories, Joubert said.
“We had started a business so frugally, and of course, without raising any funds or starting up, you are really forced to design a really solid business, “he said.” Now we see all these opportunities that we think we could be approached faster if we fundraise. So we decided to raise funds, now we can develop the team before income, which we had not been able to do before. We can do it, conquer the European market and develop faster. “