Nigeria has seen many companies catering to the growth and development of software engineers and other tech talent over the past decade. This is a niche that many in Nigeria's ecosystem consider to be growing but overcrowded.Decagon was founded by Chika Nwobi in 2018. It was a well-known entrepreneur.Decagon today announces its seed round of $1.5 million and student loan financing facility for $25 million from Sterling Bank, a Nigerian financial institution.Nwobi was a serial entrepreneur who started a few tech companies, including MTech, a mobile internet company. After years of investing through L5Lab, Nwobi has now launched Decagon to chart new ground in the fast-paced startup industry.Nwobi said Decagon is aiming to address the underrepresentation in tech of black people, beginning with Nigeria. The West African nation is both the most populous and black country on the continent.Startups are raising venture capital at an alarming rate to meet the urgent need for tech talent. The country's youth unemployment rate is staggeringly high at 50%. Tech has offered a way to create jobs but supply is not keeping up with demand. Worse, many of the country's top talents are moving to the U.S., Canada, United Kingdom, and Germany.The issue is supply. Everyone is happier if supply is stable. Decagon aims to achieve this by connecting and training engineers to work remotely for both local and foreign companies. Nwobi stated that Google, Microsoft and Facebook have all made investments in Nigerian engineering offices. However, most companies cannot afford it so they help them to access top talent as remote engineers.Decagon offers a 6-month program in software engineering and selects its applicants based on merit. The program is paid and the tuition for software engineers will be about N2million ($4,000). After the graduates have found work, the company uses an income sharing model.What if trainees cannot afford the program? Students who choose to finance their education with student loans will be able to repay N3million ($6,000) over three years.This company claims to have created the first merit-based student loan financing in Nigeria. This financing was made possible by the partnership between the financier Sterling Bank, and Nigeria's top bank, the Central Bank of Nigeria. Decagon can offer a Pay After-Learning plan to its trainees that includes laptops, accommodation and internet. It also provides a meal allowance, stipend, and internet access. According to Decagon, there is no upfront payment.Decagon claims that while over 80,000 people applied to its program, only 440 of them were accepted. This is a 0.55% acceptance ratio. Nwobi reveals three numbers to prove the company is on the right path. The company has a 100% placement rate for trainees, a 100% loan repay rate and a 41% salary increase made by its software engineers following placement.Andela, a global tech talent company, used this model before pivoting. While it didn't work for them it seems to be working well for Decagon. This is because Decagon uses debt to finance these operations while Andela used equity funding.Sterling Bank's divisional head Obinna Ukachukwu commented on student loan financing. She said that she was involved in the support of alternative education, providing loans to Nigerian students and financial literacy training. Given the outstanding performance of the portfolio, it was logical to increase our support for Decagon.Decagon secured equity financing from Timon Capital and Kepple Africa. Paul Kokoricha (Managing Partner of ACA's Private Equity Business) and Tokyo-based UNITED Inc. also participated.Nwobi said Decagon works at the intersection between edtech, finance, and the future work. The funds will be used for scaling its efforts on these three fronts. In order to increase gender inclusion, Decagon will be increasing its female cohorts to 25% from its current stats to 50% over the next three-years.He adds that the company, which he calls a tech talent accelerator, is profitable and growing at 500% annually. This capital is fuel for our mission to transform extraordinary people from under-represented backgrounds into world-class engineers through connecting them with finance, in-demand skills, and their dream jobs.Decagon is a great partner in helping to develop the top 0.5% of African engineering talent and connect them with global tech opportunities. Our network has seen a rise in the number of engineers from European and American companies asking about African and Nigerian talent. We are excited to help Decagon with their mission, Chris Muscarella, partner at Timon Capital said in a statement.Decagons raises when there is widespread skepticism regarding the viability and need for tech talent accelerators across the continent.Andela was a market leader before it changed its model. It had more than $180 million. Most of these companies have seen funding stagnate since Andela's pivot. Perhaps Decagons student loans financing method will become the next big thing in an area that desperately needs investment to solve Africa's talent crisis.
