US startup Deel valued at $5.5 billion after Coatue funding

Six months after debuting in Brazil, startup focused on international hiring announces a $425 million Series D round and plans a bold strategy of acquisitions; Deel projects that Brazil may represent up to 10% of its revenues

Carolina Pompeo

18.Oct.2021 11:00 BRT
UPDATED 27.Oct.2021 17:17 BRT

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Six months after debuting in Brazil, Deel, a startup founded in Silicon Valley that develops solutions for global companies to hire professionals from any country, has just raised a $425 million Series D round. The funding, which comes just six months after the company raised a $156 million Series C, has leveraged the startup’s valuation from $1.25 billion to $5.5 billion.

The round was led by US Coatue Management, an investor in large global companies such as Spotify and ByteDance, TikTok’s parent company, and also included Altimeter Capital, Andreessen Horowitz, Neo, Spark Capital, and YC Continuity Fund.

In an interview with LABS, Cristiano Soares, Deel’s country manager in Brazil, said that the company was not looking for a new round just yet, but that the entry of these new investors was an opportunity that could not be missed. “We have the backing of major investors, who bring more credibility to our business model. These funds bet just for the sake of success. It is amazing for the company to bring them on board.”

With the new funds, Deel plans to start an aggressive global strategy of mergers and acquisitions. According to Soares, the startup‘s M&A pipeline has more than 80 companies. “2022 will be the year of acquisitions.”

Deel is looking for two kinds of businesses: companies with a strong technological base that can bring added value to the startup‘s clients, such as the recently acquired ZeitGold, a German startup that develops artificial intelligence for the accounting area; and companies that operate in the same market as Deel and have a relevant market share. “In these cases, I can bring to Deel the revenue, the clients, the market share, and provide our technology, which they don’t have. It is a perfect match,” explained Soares.

Part of the money will also be used to drive the launch of a new international payroll product and the development of an open API, in addition to expanding the global team, which currently has 350 professionals. Deel plans to reach the end of the year with a team of at least 500 people; in Brazil, Soares expects to double his team.

Deel currently serves more than 4,500 companies, including big ones such as Coinbase and Shopify, and enables the hiring of professionals from 150 countries. The startup does not disclose revenues but claims to have an average global growth of 35% per year and to have reached a GMV greater than $ 100 million by the 2021′ Q1. In Latin America, Deel is also present in Mexico and Colombia, and already has client companies in all countries in the region.

In Brazil for six months, the startup has been targeting enterprise customers, and already has contracts with companies like Nubank, iFood, and Quinto Andar. Brazil is considered one of the most relevant markets for Deel, which projects that the country may represent up to 10% of the startup’s revenues.

“Brazil is the largest market in Latin America and has great potential for us due to the lack of skilled labor and the complexity of labor processes. Remote work continues to grow exponentially. Companies need to hire to grow and expand. And they need to hire well and fast. That’s where Deel comes in,” said Soares.

Remote work culture is a path of no return

Deel began its operations in 2019, riding the wave of a global labor internationalization process. Shortly after, the COVID-19 pandemic forced companies around the world to adopt remote work and adapt labor standards and hiring models. A breeding ground for the startup.

Recently, the debate about returning to the office or adopting hybrid models has begun to escalate. Large global companies like Amazon and Google tried to implement a return-to-office and soon backed off, adopting a more flexible approach and allowing employees to decide where they want to work from.

Asked whether the startup is worried about a possible slowdown in remote hiring, Soares was adamant: no. And not only because the global experience with the remote model has shown that it is possible to maintain efficiency and growth rates, but also due to a major change in work culture. Soares also reminds the demand for foreign skilled labor is still a reality.

The pandemic proved that it is possible to create a strong culture remotely and that efficiency is not about where you work from. If companies don’t adapt, they will lose their best talents, who will look for companies with more flexible hiring models. I don’t see any risk for the operation. Besides this, the lack of skilled local workers continues to be a great challenge. Companies need to look elsewhere for qualified professionals.
CRISTIANO SOARES, DEEL’S COUNTRY MANAGER IN BRAZIL

Making international hiring easier

Founded by Alex Bouariz and Shuo Wang, two former MIT students, Deel’s core business is to facilitate the hiring of foreign professionals. In other words, Deel takes care of the entire hiring process and the operationalization of the compensation, observing the labor and tax regulations of each country.

The platform offers the payroll services, compliance, benefits, and other features needed to hire and manage a global team. Companies can also pay teams in more than 120 currencies.

“The way people work is irreversibly changing. We founded Deel because we didn’t want international hiring or payments to be a barrier to companies building the remote global teams they need to thrive,” explained Bouariz, CEO of Deel.