We are thrilled to announce our investment in Velocity Global, a market leader in workforce solutions, offering a single platform to hire, manage, and pay global teams. Norwest is co-leading the company’s $400M Series B alongside Eldridge.
Velocity Global is the biggest employer you’ve never heard of. Companies like Shopify and Snowflake partner with Velocity Global as their Employer of Record (EoR) to manage their global teams.
What is a Global EoR?
For companies looking to hire outside of their primary jurisdiction or allow existing employees to work from abroad, a global EoR provides an employment solution that enables companies to hire employees anywhere in the world quickly, compliantly, and without the commitment that comes with setting up foreign legal entities or state registrations. The EoR allows clients to extend their hiring to new geographies cost-effectively while reducing regulatory risk.
This arrangement works particularly well for companies with a few workers distributed among different countries – for example, two engineers in Romania, a UX designer in Mexico, and a customer support rep in Indonesia. With only a few employees per jurisdiction, companies often don’t want to spend the time and money to set up foreign entities. Further, many companies would rather outsource the ongoing administrative burden and compliance risk that comes with local regulations.
An internationally distributed workforce poses significant risks for companies, including misclassification of workers, non-compliant payments, complex tax laws, and risk of IP theft. Services like immigration and visa management as well as labor compliance laws can also be hyper localized and difficult to navigate. Without an experienced global EoR to provide in-country representation, companies have little protection against these risks.
The exploding global workforce management market
The global distributed work management market is large and expanding as companies embrace remote work and seek talent arbitrage abroad. Employers of Record have existed for a while, but powerful tailwinds have driven rapid expansion of the category, including:
- Increasingly distributed workforces: COVID accelerated existing remote work trends, facilitating relocation of existing employees and hiring in new markets. Some companies, including Airbnb, have transitioned into fully-remote workforces in the wake of the pandemic.
- Growing reliance on contingent workforces: Companies are increasingly hiring independent contractors as a model for flexible growth. Hiring flexibly allows organizations to remain responsive amid rapidly changing market conditions.
- Growing legal, labor, and tax compliance costs: Employers are ill-equipped to navigate constantly changing local regulatory requirements, creating meaningful compliance risk at scale.
- Cost savings: Global EoRs have demonstrated a powerful ability to reduce HR burden and provide access to more robust and cost-effective benefits programs and insurance offerings.
- Increasing awareness of global EoR services: No longer a cottage industry, legacy players and new entrants in the global EoR space have significantly ramped up marketing spend, driving deeper awareness of the benefits of working with an EoR.
The combination of growth in distributed workforces, contingent workforces, and rise in regulatory complexity/compliance requirements locally have driven many companies to work with a global EoR organization. This segment suggests a $20B+ net revenue opportunity, largely under-penetrated today.
Velocity Global’s scale gives it an edge
Founded in 2014, Velocity Global offers a Global Work Platform that provides global employer of record and multi-country payroll solutions for W-2 workers, as well as a full suite of contractor management solutions dedicated to independent contractors.
The market for distributed workforce management is crowded, but few players have reached global scale. Velocity Global differentiates itself in the areas that matter most to clients: compliance, geographic coverage and expertise. When selecting a vendor, many companies prioritize a few key areas:
- Compliance strength: Velocity Global shines in compliance coverage. This is a core focus for buyers, amid potentially severe financial and reputational consequences for worker misclassification, labor law and tax violations.
- Talent coverage: Velocity Global serves over 7,000 workers from full-time employees to independent contractors.
- Global reach: Scale is a huge focus for customers looking for maximum flexibility. Through wholly-owned entities supporting the vast majority of talent on its platform, and long-standing, well-vetted in-country partners around the globe, Velocity Global can help any organization with global hiring in over 185+ countries and all 50 states.
- Service level and employee experience: Service, including turnaround time and time zone alignment, is a key priority. While Velocity Global provides a tech-enabled platform for ease of use, the company also provides a point of contact for its global clients and supported employees ensuring a strong client and employee experience to retain top talent.
- Pricing model and total cost: Pricing is either a take rate of payroll or a flat fee, supplemented with additional offerings such as a benefits package or one-time fees like immigration services. Velocity Global provides transparent pricing, with a 99 percent employer burden accuracy rate, verified by a Big 5 accounting firm.
- Integrations: The ability to integrate with customer HRIS, ERP, ATS, and other systems helps clients maintain a single view of the company’s workforce. Velocity Global’s current and planned integrations allow client companies to manage distributed workforces efficiently.
Leading the market with a differentiated offering
Nearly all customers and potential customers we spoke with emphasized the desire for one global platform to manage their entire distributed workforce, across the entire employee lifecycle. With the introduction of contractor management solutions paired with existing global reach, Velocity Global is well-positioned to differentiate further in this market.
By offering a single platform for companies to manage global teams, Velocity Global allows clients to manage full-time employees, temporary workers (including contingent or project-based workers), and independent contractors. The platform ensures that all workers get paid on time – with the proper tax withholding – and receive their full benefits.
Velocity Global has an impressive track record of profitable growth, driven by a strong leadership team with an ambitious roadmap for the future. CEO Ben Wright is a visionary founder who has demonstrated his ability to build Velocity Global from the ground up, with an emphasis on core values that align strongly with Norwest: integrity, professionalism, empowerment, service, and (of course) velocity.
We could not be more excited to partner with the Velocity Global team in this next phase of growth.