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Deel announced a $425 million Series D Round of venture capital for its global payroll solution. This brings its total raised to $629 million. The new round carries a $5.5 billion valuation. The round was led by Coatue.

Deel told Silicon Angle that, “the number of organizations using its platform jumped from about 500 last September to 1,800 in April and stands at 4,500 today. Dropbox Inc., Shopify Inc. and Airtable Inc.”

Deel provides an employee of record (EOR) model of co-employment for businesses to hire a distributed workforce while being compliant with local laws. Deel becomes the EOR for its clients that are hiring remote employees in a reported 150 countries. The value proposition is to keep companies compliant with local regulations and tax laws, mitigating risk while saving the customer time in administration and allowing them to focus more time on running their business.

The EOR model tends to be more practical for small businesses that don’t have the infrastructure or resources to support global internal operations and keep up with regulatory compliance. We haven’t reviewed the pricing for Deel, but returns start to diminish on these solutions as companies grow. For example, the very similar professional services organization (PEO) model in the US starts to lose its ROI between 50 and 100 employees based on the cost compared to other solutions available for employers at that size.

The big question for buyers to ask of solutions like this: Do they indemnify the client from risk on compliance?

WorkTech estimates the payroll tech market in primary global markets at $55 billion.

Global payroll is an underestimated challenge. Tax withholdings, local tax reporting and compliance, and internal operations and reporting stand out as challenges for those employers with a globally distributed workforce. And today, especially as we emerge from COVID, a globally distributed workforce isn’t exclusive to large employers. Small and medium-sized (SMB) companies and middle-market employers can now have teams, offices, or lone employees working from anywhere.

Payroll is a saturated market, and the global payroll and compliance category is no exception. Deel faces competition from solutions like Papaya GlobalVelocity Global, and omnipresent. For larger employers, the market looks to solutions like Immedis which provides more of a touchless global payroll data solution integrated across the global HR tech stack while ensuring compliance.

$13.7  billion was invested globally in work tech through Q3 2021 across 299 deals. WorkTech Market Insiders can access insights and analysis of all of the deals in our Q3 report with a free membership.

Source: https://siliconangle.com/2021/10/18/remote-hiring-unicorn-deel-ups-valuation-5-5b-latest-425m-investment/

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