Terminal raises $17M led by 8VC to source and build remote teams of engineers

As LinkedIn announces the next stage of its own ambitions in the world of recruitment by bringing in more big data insights, another one of the startups indirectly chipping away at its position among knowledge workers by providing a way of hiring and building entire teams in remote locations is announcing another round of funding.

Terminal, a San Francisco-based startup and platform that lets companies build out remote engineering teams in international locations, and then helps with the wider practicalities that include finding workspace and sorting out benefits, is today announcing that it has raised $17 million in funding. Terminal’s hubs are currently in Guadalajara, Mexico and Vancouver, Montreal, Toronto and Kitchener-Waterloo in Canada, and the company is going to use some of the funding to expand to 10 other cities globally over the next two years.

The round is being led by 8VC — the venture firm founded by Joe Lonsdale, who also happens to be a co-founder of Terminal (seems like co-founding while also funding is a pattern for Lonsdale, a prolific investor who also is famous for being a co-founder of Palantir Technologies).

Others participating include Atomic (where two other Terminal co-founders, Jack Abraham and Dylan Serota, also work), Cathay Innovation, Cherubic Ventures, Craft Ventures, Kleiner Perkins, Lightspeed Venture Partners and other unnamed investors.

Despite three of the four co-founders (the last is Luke Finney) being connected to the VC world, the startup has raised relatively little funding since being founded two years ago: prior to this it had only disclosed one raise, totaling $10 million, according to PitchBook data.

LinkedIn has carved out a big swathe of the online recruitment market specifically in the area of knowledge workers, who also use the platform to provide public profiles of themselves, to brush up their skills and to network with other folk in their various industries. That business has racked up 4 million hires this year already, CEO Jeff Weiner noted earlier today at a company event.

But within that, there are a lot of more specific use cases where the LinkedIn model is not a perfect fit, and that’s opened the door for a lot of other kinds of businesses to establish themselves and thrive.

Terminal is an example of one of these. Its particular pain point has to do with the dearth of engineers in major tech centers, and beyond, with typically five job openings for every one engineer in the U.S. alone.

While the technology world has coalesced around several key geographical areas — Silicon Valley at the epicentre and several major metropolitan areas like New York, London, Berlin and so on complementing that — the fact remains that the demand for engineers in those places, where the companies are based, still outstrips supply. On top of that, the biggest cities are overcrowded and expensive, and that turns off many people from wanting to live in them.

Terminal’s solution is to source suitable engineers in other locales and use its platform to help a company build a team from them. This is not just about building a team “in the cloud” — although the idea is that, yes, the cloud is basically what makes all of this possible — but also covering office space, payroll and other HR specifics and more.

“Terminal is taking aim at the biggest problem holding back innovation: access to top technical talent,” said Lonsdale in a statement. “The best engineers are no longer concentrated in the Bay Area. They exist all over the world. Terminal helps startups access these engineers. Many of our fast-growing companies at 8VC rely on Terminal to help them scale.” Customers currently include Bungalow, Chime, Dialpad, Earnin, Gusto, Hims/Hers and KeepTruckin.

Other startups have emerged to redress the imbalance of talent in specific locations while also helping to support new ecosystems to emerge: Andela is taking a somewhat similar approach, but it focuses on emerging markets to source talent, and engineers on its platform work as full-time employees for Andela itself, similar to Terminal.

While many companies are embracing the big swing in the direction of contractors, it’s interesting to see this alternative model emerging, which keeps the engineers off the clients’ books and on Terminal’s. In essence, it is taking a bet on the fact that it can successfully create teams remotely that might just remain for the long term at its clients’ businesses.

“We’re providing life-changing opportunities for engineers,” said Terminal CEO, Clay Kellogg (not a founder but also a partner at Atomic), in a statement.

“Developers and programmers love building their careers in an engineer-centric community working on world-changing products. We’re offering them a vibrant community with all of the HR resources, benefits and perks that they can get if they worked in Silicon Valley — without having to leave their hometown. This funding means we can provide exciting growth opportunities to even more engineers around the world.”

The push to more flexible working environments — including allowing people to work from home, as well as working more flexible hours — has really disrupted the traditional idea of 9-5 and everyone working together in a big (or small) building in order to get things done. At best, the consequences of that have sometimes led to more productivity and employee satisfaction, but challenges also remain. Terminal’s aim at building whole full-time teams in remote locations is interesting in that it will once again put a new spin on the idea of workplace culture, but for many businesses, especially startups, it’s a leap that is worth taking.

“KeepTruckin has built a modern technology platform to usher the fragmented trucking industry into the digital age, and our engineers have been at the center of creating a customer-centric experience since day one,” said Shoaib Makani, CEO and co-founder, KeepTruckin, in a statement. “As a fast-growing company, being able to attract and retain top tech talent is critical to our success. Terminal has been a key partner in helping us build our engineering team in Vancouver and tapping into Terminal’s extensive network has reduced the time it takes to scale our team.”