You really thought a month would go by without a new Israeli Unicorn alert? This time, Israeli startup Deel announced the closing of a $156 million Series C, at a post money valuation of $1.25 billion. The round was led by YC Continuity, the growth fund of world renown accelerator - Y Combinator - in which Deel participated back in the day. The company has raised $206 million to date, and is one of the startups with the quickest journeys to Unicorn status in Israeli tech history.
YC was not the only key investor on the ticket. Spark Capital and a16z, better known as the Andreessen Horowitz fund, a major Silicon Valley player. And if the name dropping so far wasn’t enough, then also joining the round is Dara Khosrowshahi, who may be more familiar as Uber CEO.
Hiring a distributed workforce, minus the bureaucracy
The Deel system helps businesses with a distributed workforce or that employ suppliers from around the world, simplify the global tax regulatory minefield, and automate compliance under one platform. The employer can choose to pay salaries by credit card, bank transfer, PayPal or ACH systems, while employees are free to decide if they want the money to go straight into their bank or PayPal account. Employers can effortlessly pay bills at the swipe of a screen, or even create bonuses based on milestones for the sales team.
For Businesses operating in the U.S., the Deel platform automates the annual hassle of scrambling to collect and fill out various tax forms. Every time a contract is produced through Deel, all relevant tax info is saved, allowing users to launch 1099s to the IRS, when they come calling at the end of the year.
Unicorn on speed
When talking about funding, this past year hit the sweet spot for Deel. Big time. In May 2020, the company announced $14 million from a16z. Then 4 months later, Deel adds another $30 million to the company piggy bank; this time attracting Spark Capital, Andreessen Horowitz, YC, GITHub CEO, Reddit founder, and others. This round, Deel ran it back with almost all of the company’s existing investors returning for more, with the addition of Uber CEO. This is interesting because Spark was the fund leading the $2.65 billion Postmates-Uber deal. The Israeli fintech company’s first investor was Sarona Partners.
“The company has grown exponentially over the past six months. Our headcount tripled, revenue increased by 20X, and we onboarded major customers like Andela, Brex, Clubhouse, as well as public companies such as TheRealReal,” said CEO and co-founder Alex Bouaziz in an interview with Geektime. Additionally, the company has launched new features such as a secure way to supply equipment to freelancers, international Visa cards, the ability to edit contracts with contractors while complying with GDPR regulations, advances on paychecks, and more.
How did you connect with the big time names backing your round?
Bouaziz: “I build relationships with executives of companies that I’ve studied and admire; ones that have a proven track record when building major enterprises. I see enormous value in their experience, opinions, their ideas, and they’re usually happy to help solve relatable problems, like hiring globally or distributed payroll.”
It’s not hard to see that Deel’s funding success has been coming with the 2020 global crisis set as background, where many people around the world transitioned to a work-from-anywhere reality. However, this latest round lands as COVID emergence promises a return to normal with the distribution of vaccines around the world. Nevertheless, Bouaziz shows no signs of worry: “Returning to the office doesn’t mean that remote work is dead, just the opposite,” he added. “There is an increasing number of companies that have opened up to the idea of hybrid work or even completely remote setups.”
The company reports that the funds will be allocated towards global expansion in existing and new markets. In addition, the company expects to hire dozens of new employees and continue launching new services on the platform. Deel was founded in 2018 by CEO Alex Bouaziz and Shuo Wang.
“I’m excited to be investing in Deel the platform, which streamlines the complex minutiae of payments and compliance, removing the obstacles so that companies worldwide can go ahead and hire the best talent anywhere, instead of just the nearest talent to them,” said Dara Khosrowshahi, Uber CEO.
Sarona Partners President and member of Deel’s Board of Directors, Philippe Bouaziz said in response to the Unicorn defining moment: “We are proud to announce Deel as our ecosystem’s first Unicorn. Deel changes the global payables game; allowing its customers to tap into the global pool of employees and freelancers, wherever they’re located, in any currency, all while complying with international tax regulations. And it’s all on one platform, one click away.”
Full disclosure: Alex Bouaziz is Partner at Sarona Partners, an investor in Geektime.