[US] Deel makes $120m cash available for startups affected by SVB collapse

Global payroll provider Deel has announced plans to provide $120 million of cash from its balance sheet to support startups’ payroll operations in the wake of the Silicon Valley Bank collapse, TechCrunch reports. 

Deel has teamed up with Andreessen Horowitz (a16z) and Y Combinator – both investors in Deel – to offer this support to customers.

On March 12, the Federal Reserve announced that Silicon Valley Bank depositors - insured and uninsured - will be fully protected. This reportedly led to collective relief throughout the tech ecosystem. 

Depositors were made whole while TechCrunch was interviewing Deel co-founder and CEO Alex Bouaziz. His first reaction to the news was to say, “We’ll see what happens, you can never be fully certain. 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.”

Mr Bouaziz later said, “It’s amazing that all depositors will be made whole. Until tomorrow morning when all the funds will be available, founders need to stay cautious and stay alert to ensure all employees get paid.”

Deel is not banked with SVB. The company operates in over 100 countries, has over 450 bank accounts and has in-house treasury management. According to Mr Bouaziz Deel paid a penalty to withdraw the cash from its accounts but is hoping that penalty will be waived.

The goal of Deel’s $120 million lifeline is to help businesses run payroll for the next two cycles “with minimal interruptions.” Companies in need of assistance can fill out a request form and apply through Deel; it will reportedly help with both employee and contractor payroll for current customers, as well as some new customers.

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

The startup is not the only payroll provider working to help its customers. On March 11, Remote announced that it would run payroll “for all employers and employees employed through Remote affected by SVB, regardless if they are able to fund payroll in time for March payroll.” 

In a tweet, co-founder and COO Marcelo Lebre said, “If your employer that is employing you through Remote is not able to pay for March payroll immediately, as they don’t have access to their funds, Remote will still pay your salary.”

Brex also announced on March 11 that it was trying to raise capital for an emergency credit line after receiving $1 billion in interest.

Brex CEO Henrique Dubugras declined to comment on how much capital is currently committed for the credit line, but, he previously told TechCrunch that he was on back-to-back calls trying to get funds locked down. 

It is not yet clear how his fundraising strategy might have altered following the regulator’s most recent update.

Mr Bouaziz told TechCrunch that “demand is not that interesting for us, because what we actually want to do is help people.”

Deel has raised nearly $680 million since its 2019 inception. It was last valued at $12 billion and claims that it has been profitable since September. It has over 450 bank accounts around the world, with JPMorgan Chase and Citibank as two of its “primary banking partners,” according to Mr Bouaziz.

Source: TechCrunch

(Links and quotes via original reporting)

Global payroll provider Deel has announced plans to provide $120 million of cash from its balance sheet to support startups’ payroll operations in the wake of the Silicon Valley Bank collapse, TechCrunch reports. 

Deel has teamed up with Andreessen Horowitz (a16z) and Y Combinator – both investors in Deel – to offer this support to customers.

On March 12, the Federal Reserve announced that Silicon Valley Bank depositors - insured and uninsured - will be fully protected. This reportedly led to collective relief throughout the tech ecosystem. 

Depositors were made whole while TechCrunch was interviewing Deel co-founder and CEO Alex Bouaziz. His first reaction to the news was to say, “We’ll see what happens, you can never be fully certain. 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.”

Mr Bouaziz later said, “It’s amazing that all depositors will be made whole. Until tomorrow morning when all the funds will be available, founders need to stay cautious and stay alert to ensure all employees get paid.”

Deel is not banked with SVB. The company operates in over 100 countries, has over 450 bank accounts and has in-house treasury management. According to Mr Bouaziz Deel paid a penalty to withdraw the cash from its accounts but is hoping that penalty will be waived.

The goal of Deel’s $120 million lifeline is to help businesses run payroll for the next two cycles “with minimal interruptions.” Companies in need of assistance can fill out a request form and apply through Deel; it will reportedly help with both employee and contractor payroll for current customers, as well as some new customers.

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

The startup is not the only payroll provider working to help its customers. On March 11, Remote announced that it would run payroll “for all employers and employees employed through Remote affected by SVB, regardless if they are able to fund payroll in time for March payroll.” 

In a tweet, co-founder and COO Marcelo Lebre said, “If your employer that is employing you through Remote is not able to pay for March payroll immediately, as they don’t have access to their funds, Remote will still pay your salary.”

Brex also announced on March 11 that it was trying to raise capital for an emergency credit line after receiving $1 billion in interest.

Brex CEO Henrique Dubugras declined to comment on how much capital is currently committed for the credit line, but, he previously told TechCrunch that he was on back-to-back calls trying to get funds locked down. 

It is not yet clear how his fundraising strategy might have altered following the regulator’s most recent update.

Mr Bouaziz told TechCrunch that “demand is not that interesting for us, because what we actually want to do is help people.”

Deel has raised nearly $680 million since its 2019 inception. It was last valued at $12 billion and claims that it has been profitable since September. It has over 450 bank accounts around the world, with JPMorgan Chase and Citibank as two of its “primary banking partners,” according to Mr Bouaziz.

Source: TechCrunch

(Links and quotes via original reporting)