Andreessen Horowitz leads $14 million round in Deel payroll start-up

Marc Andreessen, co-founder and general partner of Andreessen Horowitz

David Paul Morris | Bloomberg | Getty Images

In the middle of a brutal withdrawal in venture capital activity during the coronavirus pandemic, a Silicon Valley start-up shows what could be a route for other new businesses to seek funding.

The company, a pay platform for remote workers called Deel, won a $ 14 million round of Series A directed by Andreessen Horowitz, sources told CNBC exclusively. As part of the investment, Andreessen general partner Anish Acharya joins the board of directors of the San Francisco-based company.

While the venture capital industry has long relied on face-to-face meetings to build the necessary trust between the parties before investing large sums of money, the tour took place entirely on video conferencing tools, according to Deel’s director of operations Dan Westgarth.

Venture capital funding in general has dried up, with investors becoming reluctant to place new bets, especially for start-up companies: funding for fintech start-ups fell 37% to 6.1 billion dollars in the first quarter, according to CB Insights.

But it probably helped that Deel, founded in 2018 by MIT graduates Alex Bouaziz and Shuo Wang, was a play on the future of work that became more timely this year. The company capitalizes on the emergence of distributed workforce companies, a trend that accelerated during the coronavirus pandemic.

Its main product makes it easy for customers to hire and pay workers, no matter where they are, using one software against a patchwork of services that most companies use for teams around the world, said Westgarth. He recently joined Deel from the London digital bank Revolut.

“We have seen companies that typically hire within 30 miles of San Francisco, New York or Boston replace that with a location boundary” anywhere “,” said Westgarth in a telephone interview. “It is a function of the pandemic, which has taught businesses located in these expensive metropolitan areas that they do not need employees based there, because the remote teams work very well.”

Some companies have up to 10 different providers to pay teams located in Europe and Asia because labor laws vary by country, he said. Deel also helps workers access insurance and other benefits, which can help customers keep employees.

“We allow people to hire people very quickly anywhere without having to worry about local labor laws, which is time consuming,” said Westgarth.

Since exiting the Y Combinator start-up accelerator last year, Deel has recruited 400 customers, most of whom are start-ups themselves, he said.

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