Nigerian tech startup, Decagon raises $1.5m; arranges $25m loan facility to train students

Decagon, a software engineering company, set up by serial founder Chika Nwobi, announced that it has raised $1.5 million in a seed round and a $25 million loan financing facility to support students in its software engineering program.

The seed funding included Kepple Africa, Timon Capital and some angel investors like Paul Kokoricha, managing partner of the private equity business of ACA, and Tokyo-based UNITED Inc. The $25 million loan facility is in partnership with the financier Sterling Bank and Nigeria’s apex bank, the Central Bank of Nigeria (CBN)

Decagon is a software engineering institute ushering in a new phase of tech-powered growth and prosperity in Nigeria by training and deploying an army of leader-developers. With a project-based curriculum, agile delivery methodology, mentor matching, and leadership modules, Decagon seeks to transform any fast learner into a world-class software developer in just six months.

It currently runs a six-month software engineering paid program where software engineers are expected to pay about N2 million (~$4,000) tuition to get in. Decagon then employs an income-sharing model when the engineers find work and start earning upon graduation.

For those who cannot afford the program fees, the student can now take a loan from the $25 million facility and they are expected to pay back N3 million (~$6,000) in the space of three years.

Obinna Ukachukwu, the divisional head of Sterling Bank, commenting on the student loan financing, said, “We got involved to support alternative education by providing loans for Nigerian students complemented with financial literacy training. Based on the excellent performance of the current portfolio, it made sense to scale our support to Decagon.”

Related story: Decagon becomes 1st Talent Accelerator to become a GITHUB partner in Nigeria

According to Chika Nwobi, “Decagon aims to address the underrepresentation of black people in tech globally, starting with Nigeria. The West African country is the most populous on the continent and the most populous black nation globally.”

There is currently an undersupply of software engineers globally and in Nigeria and most of the good ones resident in Nigeria are looking to leave the country in the current brain drain being experienced in the country. The recent rise in venture capital funding in Nigeria has made the need for tech talent more evident nowadays.

The U.S. Bureau of Labor Statistics projects that employment for software developers, which includes software engineers, is going to grow 22%, substantially faster than the 4% average for all careers.

This is where Decagon comes in. It wants to contribute to filling this yawning gap by training and connecting engineers to work remotely with both local and international companies. “Microsoft, Facebook and Google have all invested in building engineering offices in Nigeria, but most other companies can’t afford to do that, so we help them access top talent to work as remote engineers,” Nwobi said.

Nwobi adds that Decagon has only accepted 440 candidates out of 80,000 applicants since its inception and the company has achieved 100% in placement rate, loan repayment rate and 410% salary increment made by its software engineers after getting placement.

Decagon says while more than 80,000 people have applied to partake in its program, it has accepted only 440 candidates. That’s a 0.55% acceptance rate. However, Nwobi discloses three figures to show the company is on the right track: the company has recorded a 100% placement rate for its trainees, a 100% loan repayment rate, and a 410% salary increment made by its software engineers after getting placement.

Decagon recently entered a partnership with the Edo State government to build a world-class tech park, the Edo Tech park, and train 15,000 people in Edo state to become software engineers over the next 5 years.