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Software developers put themselves up for auction

March 14, 2013: 12:14 PM ET

tech-auctionVenture capitalists back a startup that is looking to supply their other companies with talent.

FORTUNE -- At a time when 12 million Americans are unemployed, it's almost obscene to contemplate "auctions" for a small subset of highly-paid workers. But that's exactly what's happening for software developers, and venture capitalists have taken notice.

Today, the apt-named DeveloperAuction announced that it has raised $2.7 million in its first round of outside funding from firms like New Enterprise Associates, Sierra Ventures and Google Ventures. Fortune has learned that the deal was done at a $12 million pre-money valuation.

Here's how it works: A developer applies to the system, and hopefully is one of 150 individuals selected for an upcoming auction. Then comes a two-week process in which employers can review the candidate pool, set up interviews and "bid" on desired developers. To date, $225 million worth of job offers already have passed through DeveloperAuction, including from private employers like DropBox, Motif Investing and Quora.

If a deal is struck, DeveloperAuction receives payment from the employer that is equal to 15% of the new employee's first-year base salary. It then actually takes 20% of that total and sends it to the employee, along with a bottle of Dom Pérignon champagne.

Originally DeveloperAuction only was open to developers who either had degrees from select schools (MIT and Stanford), or experience at one of five companies: Apple (AAPL), Facebook (FB), Google (GOOG), Twitter or Zynga (ZNGA). It has since expanded its parameters, in part due to its own geographic expansion into markets like New York, Los Angeles, Boston and Seattle. The company also wants to eventually move beyond the pure developer space, which could include both the financial services and life sciences market.

"We decided to pursue funding first to get more aggressive on the existing market opportunity, but also to expand and create stronger barriers to entry for competitors," explains CEO Matt Mickiewicz. "And we also get to access the portfolio companies of our investors, all of which would be prospective customers of ours."

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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