South African talent marketplace OfferZen gets $5.2M to strengthen expansion plans
South African tech talent marketplace, OfferZen, has secured €4.5 million ($5.07 million) in Series A funding from Base Capital, a South African investment company.
Founded in 2015 by Philip Joubert, Malan Joubert, and Brett Jones, OfferZen is a tech talent marketplace that allows software engineers and developers to sign up as candidates to be recruited to tech companies for permanent roles. The developers are live on the marketplace for four weeks, during which OfferZen guarantees that they’ll get contacted by different companies
This latest funding signifies the first round of funding that OfferZen is raising. After operating solely in South Africa for over four years, OfferZen expanded to the Netherlands in April 2020, after acquiring an Amsterdam-based recruitment tech startup called TryCatch.
The expansion to the Netherlands and servicing parts of Europe contributed heavily to OfferZen’s growth in the second half of this year, experiencing a 29% increase in placements between Q3 and Q4 alone.
According to OfferZen CEO Philip Joubert, over 1,000 companies and 100,000 software developers use the tech talent marketplace. Most of its customers from both ends of the marketplace are based in South Africa, the Netherlands, and parts of Europe like the U.K. and Germany, which are prominent hubs for global talent.
“Tech hiring came to a near standstill in the first half of 2020 due to COVID. Since then, however, we’ve seen a huge acceleration in the market — companies are now raising far more capital than they were pre-pandemic, investing more in technology and subsequently hiring much faster,” the CEO said in a statement.
On how they came about the startup idea, the Jourbet brothers and Jones who all lived and worked in Silicon Valley as developers said they realized the opportunity wasn’t democratized.
“We had a bunch of friends back in South Africa, who were very smart as developers, but they weren’t working at great companies necessarily. And the reason they weren’t doing that was that they, I guess, [had] too many barriers to getting a great job where they were,” the CEO said.
Today, OfferZen connects developers to various local and global companies such as Luno, ABSA, MMI Holdings, Takealot, WeTransfer, Adyen, and Catawiki.
The company has two models for revenue generation. The first is a pay-per-placement model with a one-off 12.5% fee of the developer’s first salary. So, for instance, if a company hires a developer for $100,000, it pays OfferZen $12,500 as commission.
The second model is an annual subscription offering for companies that recruit lots of developers at once, paying upfront for OfferZen services. OfferZen says this model accounts for 40% of its revenue, while the rest is from the pay-per-hire model.
On competition, Joubert mentioned that what sets OfferZen apart from players such as Honeypot and Talent.io is how well the company focuses on building an engaged developer community through events and various channels as well as its sourcing process.
“We have a solid user base with very high-quality developers in our developer community. So we’re very, very well known [and] we invest a lot in the community,” he said.
“We also simplify the sourcing process. So we 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 company said most of the fresh funding would be plowed into OfferZen’s tech community. In addition, as OfferZen deepens its expansion into Europe into two more countries next year, a chunk of the money will go into growing its operations, product, and growth teams.