Deel Series D

Deel raised $425M at a $12B valuation in May 2022, which is like Jake insisting he was "definitely going to propose soon" right before interest rates spiked and he ghosted me for three months—technically you got what you wanted, but the timing reveals everything about the denial. Coatue and a16z led this round during that weird window when VCs were still pretending inflation wasn't real and growth-at-all-costs hadn't become a punchline. Here's a company that basically helps other companies hire people in countries they don't understand, which sounds valuable until you realize they were valued at roughly 100x their ARR during a moment when the market was pricing in infinite free money. The HR tech space was already bloated with Rippling, Remote, Oyster, and like fifteen other platforms all promising to solve the same compliance paperwork problem. This valuation assumed Deel would own the entire global payroll market while simultaneously never facing a recession.

The fundamentals weren't completely imaginary—Deel was growing fast, maybe tripling revenue year-over-year, and legitimately solving annoying tax withholding problems for tech companies doing their cringe "hire anywhere" pivots. But $12B for a company that's essentially TurboTax meets international wire transfers? That's Spotify valuing a band at stadium-headliner level after one viral TikTok. The competitive moat here is approximately as deep as my commitment issues, which is to say it exists theoretically but crumbles the second someone applies pressure. Rippling was already eating their lunch on the SMB side with better product integration, and ADP could wake up any morning and decide to actually try. The 100x+ revenue multiple only made sense if you believed every company would immediately fire their entire domestic workforce and replace them with contractors in seventeen countries, which—spoiler alert—didn't happen.

Coatue and a16z putting their names on this should've been reassuring, except both firms were essentially running a 2021 playbook in mid-2022 while the entire macro environment was actively catching fire. Jake once told me his ex was "totally cool with everything" two weeks before she keyed his Subaru, and that's the same energy as top-tier VCs writing $425M checks while the Fed was literally telegraphing rate hikes. The signaling here was less "smart money sees something we don't" and more "we have so much dry powder we're legally obligated to deploy it somewhere before our LPs start asking questions." The deal closed in May 2022—the EXACT month the tech correction was accelerating, when anyone with a functional Bloomberg terminal could see the growth multiples collapsing in real-time. This wasn't contrarian brilliance; this was momentum investing's last gasp before reality kicked in.

Exit potential? Sure, if you're banking on a 2027 IPO when markets magically remember how to value SaaS at 20x revenue again, maybe Deel justifies this valuation. But more likely they're stuck in that purgatory Jake lives in where he's too successful to fail but not successful enough to admit he peaked. The company would need to reach like $1B+ in ARR and maintain 60% margins while fighting off well-capitalized competitors to make their late-stage investors whole, which feels... ambitious. The real red flag is that this deal epitomizes May 2022's collective delusion—everyone knew the party was ending but nobody wanted to be the first to leave. HR tech isn't inherently unsexy, but paying Ferrari prices for a Honda Civic because it has international shipping is the kind of decision you make at 3am after too many whiskey sodas and one text from Jake.