Start-up Deel is betting that more tech companies will search for talent overseas as many continue to hire remotely.
The San Francisco-based payments and software company announced a $425 million Series D funding round on Monday, boosting its valuation to $5.5 billion. The latest financing was led by Coatue with participation from Altimeter Capital, Andreessen Horowitz, Spark Capital and others.
Deel lets companies hire, onboard and pay employees in different countries, even if they don’t have an office in the region. It handles behind-the-scenes tasks like payroll, benefits and tax compliance, and makes money through a subscription model. The start-up now works in more than 150 countries with roughly 4,500 companies, including Coinbase, Intercom and Shopify.
Deel’s CEO and co-founder, Alex Bouaziz, said the company saw revenue increase by 20 times year over year, helped by a scramble to onboard remote workers and a battle for tech companies to find talent.
“During this time period, everyone has understood that you don’t need to hire within a 20-mile square radius as long as you’ve got the right tools,” Bouaziz told CNBC in a phone interview. “The mindset has really changed.”
Tech companies have pushed their return to offices for months, with many pivoting to a fully remote model. Coinbase is among the newly remote-first companies, while Facebook, Twitter, Stripe and others have offered more flexibility and an option to work from home. Still, most remote roles result in a pay cut if employees opt for a less-expensive city. An estimated 25% to 30% of the global workforce will be working from home permanently by 2022, according to a recent KPMG study.
Bouaziz also pointed to a notoriously competitive labor market for tech companies — especially for engineers. The average engineering salary is $124,000 in San Francisco, according to data from Indeed.com. Tech companies are increasingly hiring in countries like Brazil, Ukraine and Nigeria, he said.
“Companies can’t really afford some of the engineers in the Bay Area right now, so you have to look elsewhere,” Bouaziz said. “If anything it’s helping companies have a bigger talent pool.”
Lucas Swisher, general partner at Coatue and one of Deel’s early investors, said the firm was drawn in by the platform’s ability to take an “overwhelming and complicated” process into a streamlined tool to make global employment more simple. Deel’s CEO said the company was on pace to do $50 million in revenue this year. While he would not comment on profitability, Bouaziz said the company was “cash efficient.”
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