\n<\/p>\n
Deel<\/a> is on an acquisition march. On Tuesday, the HR startup announced it is acquiring African-based payroll and HR software and services company <\/span>PaySpace<\/span><\/a> in a deal that marks its largest acquisition to date.<\/span><\/p>\n The move comes less than one week after Deel<\/a> announced it had <\/span>picked up Munich-based Zavvy<\/span><\/a>, an <\/span>AI-based \u201cpeople development\u201d startup building tools for personalized career progression, training and performance management.<\/span><\/p>\n Financial terms of the PaySpace acquisition were not disclosed.\u00a0<\/span><\/p>\n Johannesburg-based PaySpace boasts over 14,000 customers utilizing its software and services in 44 countries <\/span>across Europe, Latin America, the Middle East and Africa<\/span>. <\/span>Customers include multinationals across various industries such as Heineken, Coca-Cola Beverages and Puma Sports SA. <\/span>For Deel, a $12 billion HR startup facilitating talent hiring, payment, and management in over 70 countries, the acquisition offers an opportunity to strengthen its footprint in Africa.<\/span><\/p>\n Although PaySpace secured undisclosed financing last year from Sage subsidiary Netcash, a payments solutions provider specializing in debit orders and salary payouts, it doesn\u2019t fit the mold of a typical venture-backed startup and is very much a bootstrapping success story.<\/span><\/p>\n Brothers Bruce, Clyde and Warren Clark, along with George Karageorgiades, founded PaySpace in 2007 as a cloud-based payroll and human resources platform aimed at streamlining the laborious payroll runs and backup procedures associated with traditional payroll and HR software prevalent at the time.<\/span><\/p>\n Within three years of its inception, PaySpace expanded its product reach to 11 countries. By 2022, this footprint had extended to 43 countries. That year, the company\u2019s executives announced plans to further expand into Brazil and the U.K. Sales of the 20-year-old company \u2014 whose clientele includes international and local blue-chip customers, ranging in size from one-person shops to enterprises with thousands of employees \u2014 have been growing by over 30% annually<\/a>, according to managing director Sandra Crous in a recent <\/span>interview<\/span> with Financial Minds.<\/span><\/p>\n Separately, San Francisco-based Deel also revealed Tuesday that it has crossed $500 million in annual recurring revenue (ARR), <\/span>organically, outside of this acquisition. That\u2019s <\/span>up from $290 million in ARR at the end of 2022. Deel also claims that it has been EBITDA positive since September 2022 and still has $600 million left in the bank. IPO plans are still a way off but likely to be in the 2025\/2026 timeframe, Bouaziz told TechCrunch last week at the time of the Zavvy acquisition.<\/span><\/p>\n The news also follows Deel\u2019s acquisition of APAC payroll provider PayGroup. With the various buys, Deel claims that it now owns the full HR stack \u2014 entities, local teams (legal, HR payroll), and local payroll engines\u00a0 \u2014 across six continents. PaySpace <\/span>built 45 engines in the past 15 years, according to <\/span>Deel CEO and co-founder Alex Bouaziz. <\/span>Deel\u2019s<\/span> four-year ambition is to serve 100 countries with native payroll engines.<\/span><\/p>\n \u201cWe were their customer, running payroll in 10 countries using PaySpace,\u201d<\/span> Bouaziz said in an interview with TechCrunch. \u201cOur<\/span> internal team was dying to acquire them and have the ability to do on the spot calculations. Theirs is one of the best technologies we\u2019ve ever seen \u2026 We had to do a lot of convincing.\u201d<\/span><\/p>\n In a written statement, PaySpace Director <\/span>Clyde van Wyk said: \u201cLike PaySpace, Deel strives to evolve its offering through disruption. We set out to modernize the payroll industry, which was burdened by manual processes and stringent legislative and compliance requirements, much like Deel revolutionized global hiring.\u201d<\/span><\/p>\n Deel now owns over 150 entities globally and manages in-house in-country payroll teams in over 70 countries, in addition to offering Employer of Record, contractor, immigration, HRIS, and performance management services.<\/span><\/p>\n \u201cOne of the key things when you run payroll typically the way we have is in working with local software engine and tax calculations, you have to be integrated with the best payroll software,\u201d Bouaziz said. \u201cBut there\u2019s nothing like owning your own technology. We went from two engines to five engines, and now to more than 50 with the acquisition of PaySpace.\u201d\u00a0\u00a0<\/span><\/p>\n For its part, Deel is making a big push into the enterprise, something it believes PaySpace will also help with. Prior to the buy, Deel had 25,000 customers, including Klarna, Shopify and Hermes. <\/span>Some of the clients may overlap, but the combination will effectively grow its customer count fairly significantly.<\/span><\/p>\n Beyond specifics, the deal highlights a notable trend over the past 18 months: the third acquisition involving Africa-founded companies and global counterparts.<\/span><\/p>\n Last January, German vaccine manufacturer BioNTech <\/span>acquired the London-headquartered<\/span> AI startup InstaDeep<\/span><\/a>, which originated in Tunisia, for up to \u00a3562 million. In June, private equity firm <\/span>Medius bought Expensya<\/span><\/a>, an expense management startup headquartered in Tunis and Paris, for over $100 million, as per sources familiar with the transaction.\u00a0<\/span><\/p>\n Also in 2020, <\/span>Stripe notably acquired Paystack<\/span><\/a>, a startup out of Lagos, Nigeria that, like Stripe, provided a quick way to integrate payments services into an online or offline transaction.\u00a0<\/span><\/p>\n Want more fintech news in your inbox? Sign up for TechCrunch Fintech <\/span><\/i>here<\/span><\/i><\/a>.<\/span><\/i><\/p>\n<\/p><\/div>\nA push into Africa and the enterprise<\/strong><\/h2>\n