Astro, a startup helping companies to build and manage developer teams with talent from Latin America, today exited from stealth with $13 million in Series A funding contributed by Greycroft with participation by Obvious Ventures and other unnamed investors. In an interview with TechCrunch, CEO Jacqueline Samira said that today marks the public launch of Astro's platform; previously, the only way to become a customer was via an existing referral.
It's well-established that there's a severe shortage of experienced software developers. In a February poll by Infragistics, more than half (53%) of software developers and IT professionals said that the biggest challenge this year will be recruiting developers with the right skills. If the worst-case scenario comes to pass, the talent gap could become more severe in the coming years, with the U.S. Labor Department estimating that the global shortage of software engineers could reach 85.2 million by 2030.
Samira and Astro's second co-founder, Frank Licea, founded Astro after experiencing the effects of the developer shortage firsthand. Before starting Astro, they worked at the same company -- OwnLocal -- where they found it was tough to compete against top tech firms for talent. Samira and Licea ended up broadening their search beyond Austin, Texas, where OwnLocal was based, to work with outsourcing partners in Latin America. But this presented its own challenges. OwnLocal couldn't dictate pay rates, benefits and perks, and had little visibility into the work that was being done beyond a monthly invoice.
"Because traditional outsourcing firms tend to attract non-tech clients and their culture revolves around billable hours, our team members were also unsatisfied with the outsourcing company that they worked for," Samira told TechCrunch via email. "With a very limited pool of engineering talent to hire from, we were stuck with three uncomfortable options: outsource our entire product, manage a large team of independent freelancers, or rely on an outsourcing company to create our engineering culture. What we really wanted were our own teams, including our own offices, computer equipment, salaries, benefits and so on. But setting up a foreign entity and knowing how to hire in foreign markets was a distraction and difficult -- not to mention payroll, benefits, procurement, legal compliance and more."
Samira and Astro co-launched Astro as Austin Software in 2018 in an effort to overcome these roadblocks to recruiting developer talent in Latin America, specifically countries like Colombia, Chile, Argentina, Uruguay and Mexico. Astro establishes offices in markets where the English-speaking, mid- and senior-level developers the startup employs work together, leveraging an algorithm to match the developers with jobs at U.S.-based tech companies.
Samira -- while declining to give Astro developers' average salary compared to U.S. workers -- vehemently argued the platform isn't exploitative. Astro-affiliated developers receive PTO depending on their country's local laws and get paid at the beginning of every month, she said; hours are dependent on agreements between Astro's clients and individual developer teams. Astro support developers through salary and promotion reviews, Samira also noted, assigning engineering mentors who advocate for the progress on developers' teams.
"Hiring for large scale developers is a data problem akin to algorithmic dating," Samira said. "Amid the spectrum of developers and the spectrum of client needs, there’s a sweet spot that results in the mythical '10x engineer' experience for both the client and the developer."
To attempt to find this "sweet spot," Astro uses surveys to collect various performance metrics from its engineers -- including vaguer measures of engagement, happiness and satisfaction -- and combines them with a personality profile, comparing the aggregate with a score that quantifies an Astro client's engineering sophistication. Samira claims that this approach helps to minimize the typical risks associated with outsourced teams, like inadequate problem definitions, project opaqueness, and poor communication.
It's a wise pitch, given that outsourced code generally gets a bad wrap for poor quality assurance testing and impacting the morale of U.S.-based workers.
But -- setting aside the fact that there's subjectivity to personality profiles and "happiness" metrics -- it's not totally clear whether developers in Astro's employ are comfortable with the monitoring. Workplace surveillance software is increasingly common, as a timely piece in the New York Times spotlights -- but workers aren't necessarily happy it. According to a 2021 ExpressVPN survey, close to a majority believe that monitoring software is a violation of trust and would consider quitting a company that used it.
Samira was adamant developers can opt out of the monitoring if they desire.
"We prefer a human-first approach that is supported by tech," she said. "Our engineering mentors perform casual one-to-one check-ins with the Astro developers -- and our clients -- to understand each individual’s motivation, engagement and project progress. Our mentors also cross-reference information from the developer’s own teammates both in Latin America and in the U.S. The data is recorded in our platform and we supplement it with regular surveys. If a developer decides to opt out of everything, we still have insight into a developer's health by understanding the rest of the team’s viewpoint."
Simra added: "Our platform provides a bird’s-eye view of the root cause of project risks: team risks. The data and transparency we provide companies and their leadership help to avoid ... issues."
It's an argument that's evidently convincing customers. Astro claims to be profitable and cash-flow positive, with $17 million in annual recurring revenue from a customer base totaling 47 companies.
The broader shift toward outsourcing in software dev has no doubt bolstered business. According to a recent survey from Commit, outsourcing for development at startups alone is expected to increase by 70% between 2022 and 2023.
"The pandemic has only helped our business as people are way more receptive to remote employees now," Samira continued. "Also, the broader slowdown in tech over the last few months has definitely impacted companies without real traction or revenue streams. The legitimate companies still have plenty of runway but have to continue to build new features to keep them afloat, which is why they need tech talent more than ever now."
Astro plans to use its warchest -- $15.9 million, including capital from the Series A -- to develop a payroll solution for international employees outside of the Astro network, improving Astro's matching algorithm, and "enhancing" its engineer marketplace. The company currently employs 213 developers and plans to up that number to 300 by the end of the year.