TechCabal Daily – Andela CEO explains “difficult” lay-off of 135 staff in four locations

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We revealed on Tuesday evening that Andela has laid off 135 staff across four of its locations. Except engineers, staff in all of the company’s departments were affected. Only staff in Rwanda and Ghana were untouched by the wave.

It is a big deal and a pointer to the faltering state of jobs in African tech. Andela has been one of the continent’s shining lights on the tech scene for half a decade.
However, the pandemic-induced downturn has taken a toll on the company’s growth projections for 2020. According to CEO Jeremy Johnson, the layoffs were a “gut wrenching” but necessary decision to ensure the company wades through this period and remains a business afterwards.

Andela is a venture backed company. They recently raised $100 million in a January 2019 Series D round. “Like any venture backed startup, our ability to attract future investment is determined by the ratio of how quickly we grow in comparison to how much we spend to achieve that growth,” Johnson said in an email to all staff shared with TechCabal by Andela.

In other words, Andela needs to secure its growth plans to enable it retain the attraction of investors and reinvest in the tools of its operations. But because they expect the pandemic will adversely affect 50% of their clients and make new customers scarce, a downward revision of growth expectations has caused steep cuts in operational costs. The consequence? Downsizing by 10%.

The salaries of directors and c-suite staff who remain with the company will be slashed by between 10 and 30%. For the majority of those laid off, Friday May 8th will be their last work day for the company. Read the rest on the story in our detailed report here.

Due to supply chain shocks, a sharp drop in smartphone sales around the world was on the cards for the first quarter of the year. But while phone brands like Samsung suffered a 17% contraction in volume in Q1 2020 compared to Q1 2019, Transsion’s Tecno experienced a more minimal decline of 2.13% between the period. They sold about 100,000 phones less, a minor correction in the grand scheme of things.

However, as Abubakar writes here, the Chinese company may not escape the effect of the global distress that will be more evident in Q2.

A startup that builds tools to help developers identify bugs in software has closed a $5 million Series A round. Founded in 2014 in Egypt, Instabug manages the process for detecting, tracking and fixing bug issues for software builders. Instagbug raised its funding from Accel, a Silicon Valley-based VC that led Instabug’s $1.7 million seed round in 2016, MENAbytes reports.

The company says
revenue has grown 120% over the last 12 months and, boosted by stay-at-home devs, usage has gone up 45%. They promise quick integration in less than a minute and offer real-time insights contextualized for specific use cases.

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On May 15, 2020, TechCabal is holding a digital conference, themed Bullish on Africa, in partnership with Pariti. The event will speak to the future of Africa’s tech industry with optimism and strength and critical thinking about what it takes to get to a stronger industry from where we are today.

This digital conference will bring together experienced tech thinkers and doers from Africa and across the world including entrepreneurs and investors to speak about the opportunities they are looking at and to share their experiences about what the continent should be building and how to build strong, sustainable and profitable companies in a moment of crisis.

Confirmed speakers for the conference include Kola Aina, Founder, Ventures Platform;
Andreata Muforo, Partner, TLcom TIDE Africa Fund; Benjamin Schmerler, Partner, SUNU Capital; Nisha Ligon, CEO, Ubongo; and Alain Nteff, CEO, Health Lane; among others.

Sign up here to indicate interest in attending the event.

If you are a startup in health or edtech willing to join our investor matchmaking session, please fill in this form. Startups in any sector expanding as a result of coronavirus can also apply. Investors interested in meeting startups can apply here.

Pariti, the freelance-based advisory firm focused on startups and VC investors, has a new offering during the pandemic. In response to a slowdown in investing, they are offering free pitch and investor material review to any startup across Africa. Please go to pitch.pariti.io to learn more.

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