“Deel Takes Over PaySpace in Africa, Reaches Impressive $500M Annual Revenue Milestone”

On Tuesday, the HR startup announced it is acquiring African-based payroll and HR software and services company PaySpace in a deal that marks its largest acquisition to date. Financial terms of the PaySpace acquisition were not disclosed. Separately, San Francisco-based Deel also revealed Tuesday that it has crossed $500 million in annual recurring revenue (ARR), organically, outside of this acquisition. With the various buys, Deel claims that it now owns the full HR stack — entities, local teams (legal, HR payroll), and local payroll engines — across six continents. Theirs is one of the best technologies we’ve ever seen … We had to do a lot of convincing.”In a written statement, PaySpace Director Clyde van Wyk said: “Like PaySpace, Deel strives to evolve its offering through disruption.

Deel Makes Acquisition Move: Acquires HR Startup PaySpace in Largest Deal Yet

Deel is on an acquisition march, with its latest target being African-based payroll and HR software and services company PaySpace. This deal marks Deel’s largest acquisition to date, as announced on Tuesday.

L1The move comes less than one week after Deel made another acquisition, picking up Munich-based Zavvy, an AI-based “people development” startup focused on personalized career progression, training, and performance management.

In terms of financial details, the specific terms of the PaySpace acquisition were not disclosed.

Johannesburg-based PaySpace has a proven track record, boasting over 14,000 customers across 44 countries in Europe, Latin America, the Middle East, and Africa. Among PaySpace’s impressive list of clients are multinational corporations such as Heineken, Coca-Cola Beverages, and Puma Sports SA. For Deel, a HR startup with a $12 billion valuation, this acquisition provides an opportunity to expand its presence and strengthen its footprint in Africa.

However, it’s worth noting that PaySpace may not fit the mold of a typical venture-backed startup. The company has achieved success through bootstrapping, rather than relying on significant outside financing. Last year, PaySpace did receive undisclosed funding from Sage subsidiary Netcash, a payments solutions provider that specializes in debit orders and salary payouts.

L1Founded in 2007 by brothers Bruce, Clyde, and Warren Clark, along with George Karageorgiades, PaySpace started as a cloud-based payroll and HR platform. Its main focus was streamlining the complex and time-consuming processes associated with traditional payroll and HR software.

  • Three years after its inception, PaySpace expanded its product offerings to 11 countries.
  • By 2022, PaySpace had expanded its reach to an impressive 43 countries.
  • That same year, the company’s executives announced plans to further expand into Brazil and the United Kingdom.
  • PaySpace’s growth is reflected in its impressive roster of clients, which includes both international and local blue-chip companies of all sizes – from one-person operations to enterprises with thousands of employees.

In a recent interview with Financial Minds, Managing Director Sandra Crous revealed that PaySpace has been experiencing annual revenue growth of over 30%.

L2Deel Reaches Major Milestone: Crosses $500 million in Annual Recurring Revenue

In other news, San Francisco-based Deel announced on Tuesday that it had reached a significant milestone – surpassing $500 million in annual recurring revenue (ARR), excluding the current acquisition. This figure shows significant growth from the $290 million reached at the end of 2022.

Deel’s recent acquisition of APAC payroll provider PayGroup further strengthens its position as a leading HR solutions provider. With these acquisitions, Deel now offers a complete HR stack – including local teams, entities, payroll engines, and more – across six continents.

In an interview with TechCrunch, Deel CEO and co-founder Alex Bouaziz shared that PaySpace has built an impressive 45 payroll engines in just 15 years. Deel’s expanding empire now includes over 150 entities worldwide, along with in-house in-country payroll teams in more than 70 countries. Additionally, Deel offers services such as Employer of Record, contractor management, immigration support, HRIS, and performance management.

“One 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,” Bouaziz explained. “But there’s 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.”

L2Deel’s Vision and IPO Plans

Deel’s ambitious goal is to serve customers in 100 countries with native payroll engines within the next four years. However, its recent acquisition of PaySpace already moves them closer to this target.

In terms of IPO plans, Deel may not be going public anytime soon. While it did become EBITDA positive in September 2022, Bouaziz told TechCrunch last week that an IPO is likely to take place in 2025 or 2026.

L2Pushing into the Enterprise Market

Deel’s latest acquisition also signals its push into the enterprise market. With well-known clients like Klarna, Shopify, and Hermes, Deel had already established itself as a major player in the HR industry. However, the addition of PaySpace’s impressive list of clients will only enhance its position in the market.

In a statement, PaySpace Director Clyde van Wyk shared: “Like 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.”

It’s worth noting that this acquisition is just one example of a growing trend. Over the past 18 months, there have been multiple acquisitions involving African-founded companies and their global counterparts.

  • For example, German vaccine manufacturer BioNTech acquired the London-based AI startup InstaDeep, originally founded in Tunisia, for up to £562 million in January 2020.
  • Private equity firm Medius also made a major acquisition in June 2020, purchasing Expensya, a startup with offices in Tunis and Paris, for over $100 million.
  • Stripe, a major player in the fintech industry, made headlines with its acquisition of Paystack, a Nigerian startup specializing in payments integration.

These deals highlight the potential for growth and investment in Africa’s startup scene.

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Dylan Williams

Dylan Williams is a multimedia storyteller with a background in video production and graphic design. He has a knack for finding and sharing unique and visually striking stories from around the world.

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