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Deel has completed a $300mn funding round that boosts its valuation to $17bn, as the HR software start-up maintains the support of some of Silicon Valley’s top venture capital firms despite an alleged spying scandal involving its bitter rival.
The new round, which closed last week, was led by new investor Ribbit Capital alongside existing backers Coatue Management and Andreessen Horowitz, Alex Bouaziz, chief executive at Deel, told the Financial Times.
“We have been profitable for three years, revenue crossed $100mn for the first time in September and we make circa $15mn to $17mn in Ebitda [earnings before interest, taxes, depreciation and amortisation],” said Bouaziz. “That’s a 70 per cent growth rate, not bad.”
The company was valued at $12.6bn earlier this year when General Catalyst and Mubadala, Abu Dhabi’s sovereign wealth fund, bought $300mn in shares from some early investors in a secondary transaction.
Deel has been one of the fastest growing start-ups in San Francisco operating in the typically staid world of workforce management software since it was spun out of Y Combinator in 2019.
“We have been tracking Alex and team since they started the company during Covid,” said Micky Malka, founder of Ribbit. “What they are showing with their revenue is the value of their service. You don’t find many that get to that scale in five years in a super-complex business.”
However, its reputation has been hit by allegations of corporate espionage from its main competitor, Rippling, against the CEO and his father. In a series of US and Irish lawsuits, Bouaziz is accused of recruiting a Rippling employee to pass on secrets and identify potential recruits, using code words and paying him in cryptocurrency.
When confronted, the worker locked himself in a bathroom and deleted data from his phone, which he later smashed with an axe and dumped down a drain, according to his own testimony.
“I can’t comment on ongoing litigation, but it’s a frivolous lawsuit, a distraction,” said Bouaziz. “New investors coming in and existing ones doubling down is a strong signal.”
Deel has sought to dismiss Rippling’s initial claims of directing corporate espionage and has filed a lawsuit in Delaware alleging its rival is trying to impugn Deel’s reputation.
Rippling, which offers similar services such as onboarding, payroll and corporate cards, has also attracted fresh capital this year. It raised $450mn at a $16.8bn valuation in May from investors including Goldman Sachs and Baillie Gifford. The pair also share a backer in Coatue.
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“We do our own diligence and deep work, we never follow the noise in the news or on Twitter, or the ‘he said, she said’,” Ribbit’s Malka said of the lawsuits. “We approached them, not the other way around . . . the company has to deal with what they have to deal with, I will not comment on that, but we have our eyes wide open.”
Anish Acharya, a partner at Andreessen who is on Deel’s board, said: “We have been investors since the series A, when it was a wee minnow . . . the company has just had the best six months in its history. It is a public market company in the very near term.”
While also declining to comment on the lawsuit or Bouaziz’s conduct, Acharya added: “The people that know the business most intimately, those are the ones that are doubling down, and credible new investors are joining the cap table.”
Deel will use the money for more acquisitions — adding to the 13 it has made so far — improving its in-house payroll and banking software, as well as investing in artificial intelligence products, said Bouaziz.
