Deel is making more than $120 million of its own cash available to support customers affected by the SVB crisis

Deel is making more than $120 million of its own cash available to support customers affected by the SVB crisis

Deel is making more than $120 million of its own cash available to support customers affected by the SVB crisis

Global payroll provider Deel plans to provide $120 million of its own cash on its balance sheet to support payroll operations for startups following the shutdown of Silicon Valley Bank. He has teamed up with Andreessen Horowitz (a16z) and Y Combinator – both of whom are investors in Deel – to offer client support.

The Federal Reserve just announced that Silicon Valley Bank depositors, insured and uninsured, will be fully protected, leading to collective relief across the tech ecosystem. Filers were reassured as TechCrunch interviewed Deel co-founder and CEO Alex Bouaziz, whose first reaction to the news was, “We’ll see what happens, you can never be completely sure.” But in the meantime, we’re ready with our customers, and customers right now and whatever we can do to help, we’ll be there.

He later added, “It’s amazing that all the depositors are cured. Until tomorrow morning, when all funds are available, founders must remain cautious and vigilant to ensure that all employees are paid.

Deel, in particular, is not banked with the SVB: because it operates in more than 100 countries, it has more than 450 bank accounts and has internal cash management. Deel paid a penalty, Bouaziz said, to withdraw the money from his accounts, but hopes that penalty will be waived.

The goal of Deel’s $120 million lifeline is to help companies manage payroll for the next two cycles “with minimal disruption.” Businesses that need help can fill out an application form and apply through Deel, which says it will help with both employee and contractor payroll for current customers, as well as some new customers.

“We have freed up some of our cash because it is our responsibility to help other businesses, but we have to be very selective,” Bouaziz said. “Because we’re already in the payroll system, we have ways to get good terms.”

Before the decision was announced, negotiators and companies across the country were working to find ways to help startups make the payroll. With the government now promising relief, the efforts are now more useful as a contingency plan in the event of a mishap occurring by Monday morning. The terms of Deel’s cash offers are unclear at this time; making it difficult to compare the option with the SVB’s cash in the bank that would be released to the founders from Monday morning.

Deel appears to be working on a founder-friendly deal, with Bouaziz adding “the goal here is not for us to make money. It’s more about helping people and genuinely gaining the trust of the market as a payroll leader.

Brex announced yesterday that it was trying to raise capital for an emergency line of credit this weekend after receiving $1 billion in interest. CEO Henrique Dubugras declined to comment on the amount of capital committed for the line of credit so far, but in the last conversation with TechCrunch, he said he was online to try to lock in the funds. It’s unclear how his fundraising strategy may have changed given the regulator’s latest update.

Bouaziz said “the demand is not so interesting for us, because what we really want to do is help people.”

Deel, which has raised nearly $680 million since its inception in 2019 and was last valued at $12 billion, says it has been profitable since September. He has more than 450 bank accounts worldwide, citing JPMorgan Chase and Citibank as two of his “main banking partners”, according to Bouaziz.

In January, the fintech-turned-HR company revealed that it had reached $295 million in annual recurring revenue (ARR) by the end of 2022, up 417.5% from ARR’s $57 million. made by the end of 2021. At that time, Deel said he had more than 15,000 customers, including Nike, Subway, Reebok, Forever 21 and Klarna. Today, Bouaziz said the company has nearly 18,000 customers. Also in January, Deel acquired Capbase for an undisclosed amount in a cash and stock transaction, marking its entry into the equity management space.

Tech

Be the first to comment

Leave a Reply

Your email address will not be published.


*