Fast-growing payroll provider Deel is making a sizable acquisition, its third this year.
Deel announced on Thursday that it acquired Hofy, a London-based company that delivers and helps manage office equipment for remote hires. Financial terms weren’t disclosed, but a source familiar with the matter told TechCrunch that the deal was worth over $100 million.
Deel co-founder and CEO Alex Bouaziz said the buy will allow Deel, which already had a partnership with Hofy, to provide “deeper integration” with Hofy’s services. Longer-term, it’ll establish the foundation for a forthcoming IT-focused Deel product called Deel IT, he added.
“Later this year, we’ll launch Deel IT, which will include software provisioning, app access management, integrations with mobile device management and identity tools, as well as lifecycle management to deploy, collect, repair, and replace devices,” Bouaziz said. “It will be a full IT stack for customers, making Deel even more of a one-stop-shop for all things HR and scaling your business globally.”
Both of Hofy’s co-founders, Sami Bouremoum and Michael Ginzo, along with the rest of the startup’s leadership team and 120 employees, are joining Deel to build Deel IT. Bouaziz says that Deel will work with Hofy’s existing customers to migrate them to the Deel platform.
“Current Deel and Hofy customers won’t see a change in service,” Bouaziz said.
Bouremoum, an ex-Bain & Company consultant, and Ginzo, who previously led product at Deel (making the acquisition a bit of a revolving door situation), launched Hofy in 2020 at the start of the pandemic. The shift to remote work benefitted Hofy greatly, as many companies were forced to figure out a way to configure and decommission work devices sent to staffers’ homes.
Once integrated with an HR system, Hofy could be used to set rules like device acquisition budgets and usage policies. New hires invited to the platform could order their equipment — whether laptops, monitors, smartphones or accessories — ahead of start dates.
To customers, Hofy delivered support, including loaner devices in the event equipment needed repairs. Hofy handled offboarding as well, letting admins remotely wipe devices pre-collection, and provided APIs that allowed HR vendors to offer hardware delivery and recovery as a managed service.
Hofy managed to expand its customer base to over 700 businesses (including Forbes, GoDaddy, HelloFresh and Canva) prior to the acquisition and raise more than $30.2 million in capital from investors including CNP, Stride, 20VC and Day One Ventures. In an interview in 2022, Bouremoum told TechCrunch that Hofy was “cash flow positive.”
“Many of our customers were asking us to help with equipping their employees,” Bouaziz said. “This feedback, combined with our own experience with Hofy, made us look into deepening our relationship further than a partnership.”
For Deel, which is currently valued at over $12 billion and has raised $630 million, the Hofy purchase is yet another step in the direction of payroll management market dominance.
Deel’s bread-and-butter business is processing international payrolls and hiring employees through one of its local entities on an organization’s behalf. (Deel acts as the employer of record, managing compliance with employment laws in each country.) But the company also assists with creating contracts that comply with local labor laws, helping workers access health insurance and providing immigration advice about visa processes.
Earlier this year, Deel acquired Zavvy, a “people development” startup headquartered in Munich, and PaySpace, an Africa-based payroll engine. Shortly after, Deel reported that it reached a milestone of $500 million in annual recurring revenue and a headcount of 4,000 employees and 35,000 customers.