OfferZen, a South African tech talent marketplace, has raised €4.5 million ($5.07 million) in Series A funding to grow its operations and deepen its European expansion.
The company, which is one of the recipients of the expanding global need for digital talents, got its fresh funding from Base Capital, a South African investment company.
According to the company, the majority of the new funds will be invested in OfferZen’s tech community.
Furthermore, a portion of the funds will be used to scale the company’s operations, product, and growth teams as it plans to expand into two more European countries next year.
OfferZen, a tech talent marketplace, allows software developers and engineers to register as candidates. They are then filtered by OfferZen and made available to businesses that need the required talents.
The developers will be live on the marketplace for four weeks, during which time OfferZen assures them they will be approached by various businesses.
According to the company, developers are only permitted to work in permanent positions.
Over 100k tech talents onboarded
OfferZen was founded in 2015 by Co-founders Philip Joubert, Malan Joubert, and Brett Jones. Its goal is to create an engaged developer community through events, multiple platforms, and its sourcing model.
It was initially active only in South Africa for four and a half years before expanding to the Netherlands in April 2020 after acquiring TryCatch, an Amsterdam-based recruiting tech business.
According to OfferZen CEO, Philip Joubert, the IT talent marketplace is used by over 1,000 firms and 100,000 software professionals.
“Access to top tech talent has become a bottleneck for many companies, and we’re in a position to help companies solve that,” he said.
The majority of its clients are headquartered in South Africa, the Netherlands, and regions of Europe such as the United Kingdom and Germany, which are important centres for global talent.
The company experienced tremendous growth in the second half of 2020, fueled by its expansion into the Netherlands as well as servicing parts of Europe. The company enjoyed a 29 per cent increase in placements between Q3 and Q4.
“Due to COVID, tech hiring came to a halt in the first half of 2020. Since then, however, we’ve witnessed a significant acceleration in the market, companies are raising significantly more capital than they were pre-pandemic, investing more in technology, and, as a result, recruiting much more quickly,”CEO, Philip Joubert
Tech talent management
Income-sharing agreements, which are used by tech talent companies like Bloom Institute of Technology, and hourly rate charges, which are used by Andela and Toptal, are not used by OfferZen.
Instead, the South African tech talent organization relies on two business strategies to make money.
The first is a pay-per-placement model, in which the developer is charged a one-time 12.5% fee on their first salary.
The second model is a yearly subscription for organizations that want to hire a large number of developers at once and pay for OfferZen services upfront.
According to OfferZen, this strategy accounts for 40% of its revenue, with the rest coming from the pay-per-hire model.
“We also simplify the sourcing process. So we obviously have a lot of candidates on our platform, which is a good thing, but then companies also want to find the most relevant candidates. And so we have a sophisticated matching engine that shows the most relevant candidates for the positions that companies are currently hiring for,” the CEO said
Luno, ABSA, MMI Holdings, Takealot, WeTransfer, Adyen, and Catawiki are just a few of the local and global companies that OfferZen links developers with.
Prior to this round, OfferZen was bootstrapped by the founders. It chose to raise funds now because it requires venture capital to grow into new European markets, according to Joubert.
“We had built up a business in such a frugal way, and, of course, without raising funding and bootstrapping, you’re really forced to design a really strong business. Now we are seeing all these opportunities that we think we could be tackled faster if we raise funding. So we decided, let’s raise some funding, now we can grow the team ahead of revenue, which we haven’t been able to do before. We can do that, take on the European market and expand faster.”
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