September 23, 2022
Why QED invested in Remofirst
Over the past three years, two trends have caused major shifts in global employment markets; First, COVID-19 made remote work the norm rather than the exception, and second, the competitive talent market driven in developed markets drove companies to look abroad as they build out their teams.
Employees increasingly expect flexibility from organizations when it comes to work location, within and across borders. As a result of these two trends, in the next five years, 78 percent of companies will have globally dispersed teams.
However, hiring and managing international teams is an operational nightmare, as employment laws globally dictate that companies must have subsidiaries in countries in which they operate. For decades, this challenge was solved by incumbent companies called ‘employers of record’ (EoR) that hired employees on behalf of global companies.
These incumbent companies are challenging to partner with at scale as they lack the basic tools to allow for tech integration. As a result, hiring internationally is still a challenge and can be prohibitively expensive for SMBs. The market for cross-border payment alone is $92.5 billion today and growing, 25 percent annually. But payroll is the bare minimum – globally disbursed employees need to be hired under the same conditions as their local colleagues and receive benefits, insurance, spend tools and earned-wage access.
Off the back of this skyrocketing demand for global payroll, several large and well-funded companies have emerged to service the space over the past three years to enable seamless global hiring. These companies expanded at an impressive speed and took an operationally intense approach.
This approach drove up prices, often to more than $1,000 per employee per month. But remote hiring is the future and we believed there had to be a way to deliver these services in a software-first way at lower prices that made them available to SMBs as well as enterprises.
We were proven right when we met Nurasyl Serik, founder and CEO of Remofirst. As a third-time founder who faced challenges in hiring globally himself, Nur was uniquely resourceful and thoughtful in his approach to the market. Whereas many of its incumbents are largely operational/distribution plays, Remofirst is a software and payments business.
Through its software-first approach, Remofirst is enabling global payroll at a fraction of today’s cost, starting at $199 per employee per month, and maintaining healthy and scalable unit economics. In a future where global payroll will become table stakes, cost efficiency will be critical to the long-term success of any major player, and we found that in Remofirst.
Just 18 months into his journey, Nur is just getting started. With a vision to bring equal employment conditions to remote employees globally in a cost-efficient and hyper-scalable way, payroll is just the first step. What we are most excited about at QED is the opportunity to embed additional financial products on top of Remofirst’s payroll software. The low-hanging fruit here are the essentials their local colleagues enjoy – benefits, insurance, cards for spend management, and earned-wage access. It is an administrative nightmare to set these benefits up one-off in countries around the world for just a handful of employees. By bundling these with its core payroll product, Remofirst can make sure that remote employees enjoy equal employment conditions as the rest of the firm.
QED is excited to partner with Nur and Remofirst and bring our learnings from a global portfolio of companies serving employees – from benefits (Betterfly), payroll (Cobre) and spend management (Payhawk, Tribal) to earned-wage access (Refyne, Rain, Wagestream, Minu) and insurance (Coverforce, Decent).
If you are looking for lower-cost remote employment providers without compromising on service, look no further than Remofirst.
Alexandra Piedrahita is a principal at QED Investors. Yusuf Özdalga is a partner at QED Investors and the head of Europe. Both are based in London.