‘Don’t chase VC money’: Skuad’s insights from $81m exit

Southeast Asia’s startup community celebrated one of its most notable exits in August when US-based payments platform Payoneer fully acquired HR and payroll firm Skuad for US$61 million in cash.

Exit events in Southeast Asia remain rare despite a growing number of firms reaching unicorn status. This makes Skuad’s journey – a feat it achieved within just five years of its founding – even more noteworthy.

Skuad CEO Sundeep Sahi / Image credit: Timmy Loen

How did Skuad (the Bahasa Indonesian word for “squad”) land such a favorable deal? Did it hit the exit lottery with the right mix of investors? Was it just a matter of capital finding its way to a well-built business?

In an interview with Tech in Asia following the deal announcement, Skuad founder and CEO Sundeep Sahi reveals that it was a bit of both.

“More than VCs would have given”

Founded in 2019, Skuad rode on a growing trend of companies hiring an international workforce, which was accelerated by the Covid-19 pandemic. Tech talent was scarce in countries like Indonesia, its first market, and it saw a “massive uptake” from firms looking to hire entire teams, from early-career roles to more seasoned ones.

The company handled hiring, international payroll, and remote onboarding in its early days. But in 2021, it removed hiring from the equation, amid rising demand from clients to provide HR services for existing employees that were working remotely.

With Covid-19 at its peak, “we found a much larger and scalable opportunity” in managing global teams than in talent sourcing, Sahi explains.

Today, 45% of Skuad’s clients hail from the US, with a “significant” portion of its customers coming from developed markets including Singapore, Europe, and Australia, the firm says. Its clients pay a fee per employee.

According to TechCrunch, which first reported the deal, Payonner could pay an additional US$10 million if it meets its performance target within the next 18 months. Payoneer could also pay out another US$10 million in restricted stock units if key personnel in the firm stay on, bringing the total deal value – on paper – to US$81 million.

Photo credit: Skuad

Data from Alternatives.pe, which tracks regulatory filings, shows that Skuad made US$9.2 million in revenue in 2023. Based on the deal size of US$61 million, the acquisition would have delivered a revenue multiple of 6.6x – or 8.8x if the total potential deal value of US$81 million is realized.

“We were very scrappy”

Raise less and build a good business