HR Startup Makes First Acquisition Since Coatue Backing

• HR startup Deel has made its first acquisition since landing investment from New York giant Coatue.
• The $5.5 billion startup has bought Slack HR plugin company Roots for an undisclosed fee.
• Deel CEO Alex Bouaziz has tipped further consolidation in the HR tech sector.

Remote hiring startup Deel has made its first acquisition since it landed investment from New York hedge fund Coatue and has tipped the HR tech industry to go through widespread consolidation.

The San Francisco-based startup, which makes it easier to hire people in different countries by automating functions like payroll and compliance, has bought US HR software company Roots for an undisclosed fee.

Deel has benefitted hugely from the shift to remote working during the pandemic, having more than quadrupled its valuation to $5.5 billion in October. In addition to automation, Deel also acts as an employer of record (EOR) in more than 50 countries, which enables companies to hire people in other jurisdictions without having to set up a local presence or worry about regional tax codes.

The move to buy California-based Roots is likely to be the first in a line of acquisitions as the firm deploys its freshly-raised cash to grow its product offering, according to Alex Bouaziz, Deel cofounder and CEO. Deel has previously acquired payroll and bookkeeping company Zeitgold

Roots is a platform that aims to enable dispersed workforces to collaborate more effectively and reduce burnout. The startup, which is used by the likes of Miro, GitLab, and AngelList, allows companies to plug different HR functions like time off and onboarding into

Slack

.

“We had been using Roots as a company and appreciated what they were doing to help us build more meaningful connections as our team grew,” Bouaziz told Insider. “I think HR consolidation is likely as an industry, as we become more and more of HR player it’s important to continue growing our offering.”

Bouzaziz added that Roots’ plugin tools would soon be available to Deel’s existing customers.

Kevin Corliss, the Roots founder and CEO, said his startup can help Deel solve the issues facing distributed workforces.

“Deel’s vision is to make work ‘work’ for anyone, no matter where they live or what they love to do,” he said.

“In a more distributed world and workplace, building a strong culture, increasing collaboration, reducing burnout, and doubling down on inclusiveness across borders have yet to be figured out.”

Deel has also hired Casey Bailey, who previously held senior roles at companies like Divvy and Uber.

The market for virtual HR software is set to be worth around $43 billion by 2026, according to research by CB Insights.