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1 Report Trends in the Virtual Work Startup Ecosystem
1 Virtual Work Trends
Introduction
During the Covid-19 pandemic, most knowledge To better judge the long-term impact of the vir-
workers experienced an abrupt shift to work- tual work revolution on workplace dynamics and
from-home, and the growth of virtual work com- the resulting corporate travel activity, this re-
panies skyrocketed. port analyzes the ecosystem of over 250 rele-
vant startups that offer virtual solutions bridging
At the same time, air passenger traffic reached its physical and virtual business interactions.
lowest levels of the millennium. Business travel
came to a near standstill. In 2021, mobility re- By providing virtual alternatives to standard busi-
strictions are loosening, and travel is slowly re- ness activities, these startups undermine the
turning. However, the shift to virtual work will need for people to meet in person and thereby
continue—even when the pandemic eventually reduce the need for business travel.
concludes.
Our goal with this report is to provide an over-
The big question remains: What parts of busi- view of the startup dynamics in the Virtual Work
ness travel will return, and which will remain vir- market by analyzing Venture Capital investment
tual? Virtual work startups such as Hopin, Gather. trends where these players are concerned. We
town, and mmhmm are already disrupting busi- also provide a framework for travel companies to
ness activities such as travel for corporate events, evaluate the impact of different virtual work cat-
networking, and client meetings. egories on their business activities.
2 Virtual Work Trends
Who we are
This report has been created by the Lufthansa Our mission is to create and capture value be-
Innovation Hub with the support of Dealroom. yond flying. To do this, we invest in startups,
initiate partnerships with startups, and most
The Lufthansa Innovation Hub importantly, incubate new digital services and
products ourselves. To learn more, visit the
The Lufthansa Innovation Hub (LIH)—named LIH website or stop by our LinkedIn page.
“Germany’s Best Digital Lab” by Capital Mag-
azine—is the digital transformation spearhead In our work, we always follow the credo, “data
of the world’s largest aviation corporation, the beats opinion.” We want to act on facts rather
Lufthansa Group. than beliefs. That’s why exploring the Travel and
Mobility Tech ecosystem is the crucial founda-
The LIH discovers, evaluates, and imple- tion on which all of the Lufthansa Innovation
ments new digital business opportunities in Hub’s activities are built on.
the context of Travel and Mobility Tech with in-
dustry-leading airlines such as Lufthansa, Eu- Our insights are regularly shared on our dedi-
rowings, SWISS, and Austrian Airlines, the cated market intelligence platform, TNMT.
frequent flyer program Miles & More, as well as
other renowned Lufthansa Group entities.
3 Virtual Work Trends
About Dealroom
Dealroom as the exclusive data provider of this report is a global startup &
venture capital intelligence platform.
Dealroom.co is the foremost data provider on startup, early-stage, and
growth company ecosystems in Europe and around the globe.
Founded in Amsterdam in 2013, Dealroom works with many of the world's
most prominent investors, entrepreneurs, and government organizations to
provide transparency, analysis and insights on venture capital activity.
4 Virtual Work Trends
Approach
The 100 virtual work startups
challenging business travel
Startups ranked by VC funding received
To find all the relevant startups in the global vir- Given the fact that our startup scouting cov-
tual work ecosystem, we scouted hundreds of erage is better in Western countries than else-
relevant players and categorized them based where, especially Asia, we also reached out to
on their primary business focus. These include local experts where needed.
virtual events, virtual meetings (i.e., presenta-
tion and interaction tools), virtual chats (i.e., The focus of this report is exclusively on sec-
text messaging and video chats), virtual collab- ond-generation virtual work startups that are
oration (i.e., knowledge sharing, content crea- defined by an augmented, immersive solution
tion, and workflow alignment), and virtual office bridging the gap between physical and virtual
space (i.e., digital alternatives to office build- interactions, compared to the first generation of
ings and department floors). For a more detailed teleconferencing tools spearheaded by, for ex-
overview of all startup categorizations, please ample, Zoom, Skype, and Slack.
refer to the interactive Dealroom Landscape.
Furthermore, these startups address a business
To be able to do so, we utilized the Dealroom need that was often a reason for a business trip
platform, which offers an extensive venture in pre-Covid times. Hence, startups that offer
capital database built upon machine learning purely HR, legal, or back-office technology are
and data-driven information harvesting. excluded from our analysis.
5 Virtual Work Trends
#1 The virtual work mega-trend
started long before the pandemic
As demonstrated by the number of virtual work another high in 2019, driven by changing work-
startups founded globally over time, virtual force demographics with digitally-native Gen Z
work has been a mega-trend long before the workers increasingly entering the labour market
Covid-19 pandemic. Zoom, for instance, the along with the increased participation of female
company that became synonymous with the workers during this time. Both demographics
2020 virtual office shift, was founded back in are advocates for more flexible and virtual work-
2011, while Skype dates back to 2003. ing arrangements.
The first significant spike in startup founding Covid-19 provided another startup adoption
activity occurred in 2016, and can be largely launching pad on top of already accelerating
attributed to the growth of the so-called knowl- founding dynamics. A new record number of
edge economy—the concept of more flexible startups were founded in 2020, but the true
and remote work schemes pioneered by com- effects of the pandemic on founding dynamics
panies such as GitHub and Google, propelled are likely even higher due to an unavoidable lag
by the availability of more reliable and cost-ef- in tracking and reporting of most recent startup
fective software solutions. The growth reached foundings.6 Virtual Work Trends
#2 Highlighted by the pandemic,
investors intensify funding
The boost in founding activity was further accel- Even more impressively, the investor craze led
erated by growing investor attention to the vir- to several mega-rounds taking place in 2020,
tual work cause. As the entire knowledge econ- bringing the average funding amount per deal to
omy turned remote almost overnight in early $17M, up from $10M the year before.
2020, venture capitalists became aware of the
fast scaling and growth potential of virtual solu- This inflow of venture capital naturally prompt-
tions, especially as adoption skyrocketed during ed even more founders to enter the virtual work
lockdowns in many parts of the world. ecosystem—so it’s no wonder that the appe-
tite for virtual work startups is progressing into
This investor hype resulted in over 100 VC deals 2021 at the same pace, if not higher, as aver-
in virtual work startups in 2020 alone, a 66% in- age funding amounts have spiked to ~$40M per
crease from 2019 (and again, this figure is likely deal. This indicates that the motion is likely to
even higher due to reporting lags). continue in the coming years.7 Virtual Work Trends
#3 High investment growth to be
sustained by recent mega rounds
Funding trend lines are even steeper when ing total VC investments to $1.2B in Q1 alone.
turning to total dollar amounts invested in re-
spective virtual work startups instead of the The hypergrowth of these heavily-funded front-
number of deals. Total VC funding investments runners sets a strong tone for investors, and will
amounted to more than $1.8B in 2020, reveal- further accelerate innovation in the near future.
ing 226% growth from 2019. This astounding
spike was powered by multiple mega-rounds, However, it’s important to note that the current
including from virtual events startup Hopin rais- funding dynamics are most likely inflated be-
ing $166M, Bizzabo raising $138M, and virtu- cause of persisting forced lockdowns and mo-
al whiteboard startup Mural raising a total of bility restrictions in certain parts of this world.
$118M throughout the year.
Although we believe that the virtual work startup
The 2021 funding trajectory looks equally im- ecosystem will continue to expand, the growth
pressive. Two startups have raised rounds larger rate will likely slow down once workers can ven-
than $350M each (Hopin and Calendly), bring- ture out fully without restrictions.8 Virtual Work Trends
#4 Virtual work is a booming sector
but still in its nascent days
The rapid rise of upcoming virtual work start- functionalities that emulate in-person interac-
ups such as Hopin reveals a market gap for new tions, and thereby enable fluent team collabo-
software solutions and novel technology appli- ration.
cations that first-generation virtual work com-
panies such as Zoom, Skype, MS Teams, and While the hybrid future of work is still being
others were unable to capture. shaped, with no single market leader established
at this point in time, new startups continue to
What differentiates the new generation of vir- enter the market and fill this gap. This is con-
tual work ventures is that they bridge the gap firmed in our funding analysis, where the share
between online and in-person interactions, with of angel and seed rounds jumped to 25% in
additional interactive functionalities (Around) 2020—indicating that the virtual work market is
that help to captivate the audience (Klaxoon), still in its nascent days, with investors betting on
or even sense non-verbal cues (Headroom). In a wide selection of tech offerings with little or no
the context of team collaboration, startups like proven product-market fit.
Pitch, Miro, and Gather.town offer augmented9 Virtual Work Trends
#5 The West drives the remote
work shift as Asia holds back
In contrast to most other startup verticals, ing long economic shutdowns. Due to shorter
where Asia (particularly China) is a major breed- enforced home office time, Asian knowledge
ing ground for new tech startups, our data workers did not have the need to establish more
shows that the virtual work revolution is charac- sophisticated home office setups, and employ-
teristic of the Western world. An overwhelming ers largely stuck to their existing software tool
majority (about 90%) of newly-founded startups infrastructure.
are headquartered in the U.S. and Europe, while
Asia-based startups account for less than 6% of Secondly, mobile phone penetration has histor-
all companies. ically been higher in many Asian countries than
in the West, with mobile (video) chat functional-
To account for confirmation bias (although we ities more prominently integrated into people’s
cannot fully rule it out), we actively scouted for daily lives (think Tencent’s WeChat). This also
Asian virtual work startups and potential trends reduced the need for entirely new virtual work
holding back the shift in the Far East. We arrived tools, as large parts of the population were al-
at the following assumptions: ready connected virtually. Lastly, tech giants like
Tencent dominate online communication by ac-
First, Asian countries such as China, South Ko- quiring or building companies internally, making
rea, and Vietnam have contained the virus faster it difficult for new startups to succeed in this
than most countries in the West, thereby avoid- space.10 Virtual Work Trends
#6 Covid-19 benefited virtual event
and collaboration the most
Looking at the share of funding value ($) per vir- synchronously collaborate online. In addition to
tual work category, our data tells us that start- virtual collaboration, the virtual events category
ups focusing on virtual collaboration—namely gained massive traction during the pandemic,
platforms that allow workers to create content increasing its funding share from 7% to 27% in
online, collaborate via knowledge sharing, or 2020. We expect virtual events startups to con-
align on workflow and objectives—comprise tinuously eat away market share from in-person
the first major work category to be virtualized event participation, even after the pandemic,
pre-Covid, as seen by the majority of funding with hybrid event formats slated to become the
flowing into various collaboration startups even new norm.
before 2019.
With all that being said, we project technology
Interestingly, virtual collaboration has also prov- to continue to advance rapidly, especially where
en to be the most-funded category throughout collaboration and event software are concerned.
the pandemic, with close to $1B raised in 2020. Therefore, both categories will seriously chal-
Therefore, we expect this category to remain lenge the need for business travel to corporate
prevalent post-pandemic, as an increasing num- events (and to meet with colleagues from differ-
ber of distributed teams look for solutions to ent company locations) going forward.11 Virtual Work Trends
#7 Founded in 2019, Hopin is the
definition of hockey-stick growth
The pandemic has provided unprecedented Hopin is sustaining its hyper-growth via a vigor-
growth opportunities for a handful of startups, ous acquisition strategy, supported by its vast
especially in the virtual collaboration and events capital inflow. Right after its first mega-round
space as described previously. in November 2020, Hopin enriched its virtual
events business with three acquisitions: event
One of these hypergrowth players is virtual networking app Topi, and two live streaming
events provider Hopin, a company founded in platforms, StreamYard and Streamable. Through
2019 that achieved exponential growth during StreamYard alone, Hopin gained access to over
the pandemic. 100K paying customers and 3.6M users.
Visibly unaffected by scaling issues, the start- Following its second mega-round of ~$400M,
up reached a valuation of $5.65B less than two Hopin acquired voice and video collaboration
years after its founding, and grew its ARR from platform Jamm, signaling an expansion into
zero to $70M in the past 12 months, making it general video communication and collaboration
the fastest-growing European startup ever as of verticals, as the platform strives to stay relevant
June 1st, 2021. after the pandemic concludes.12 Virtual Work Trends
#8 Virtual office startups surge as
workers miss office serendipity
It is not only virtual collaboration and events tracking, and instead creating a fully-augment-
startups driving forward radical change and in- ed, immersive, and interactive virtual experience
novation in the virtual work ecosystem. A deep- of being “at work.” Highly-promising companies
er look at startup founding dynamics points to include Teamflow (with $15M in funding) and
another rapidly-emerging category: namely, vir- Spatial (with $22M in funding), which deliver a
tual office space. seamless VR experience. Companies like Gath-
er.town—currently the most-funded virtual of-
Although not as heavily funded as collabora- fice startup with $26.5M secured—offer a virtu-
tion and event players, the recent wave of new- al office environment that resembles some sort
ly-founded virtual office space ventures, repre- of Pokemon game world.
senting more than ⅓ of all foundings in 2020,
indicates that startup founders are seeing a lot We expect a lot of this startup traction to be
of untapped potential in recreating physical of- based on the fact that many workers eventually
fice spaces in a virtual manner. To achieve this, started to miss the social life of a physical of-
startups are moving beyond simply “digitizing” fice during the pandemic, and that they decided
routine office workflows like budgeting and time they no longer wanted to miss out on this.13 Virtual Work Trends
Conclusion
Virtual office solutions are yet
to see major investor interest
After analyzing various forms of funding dynamics across the virtual work
startup ecosystem, the ultimate question remains: What is here to stay
post-Covid?
To better judge the long-term impact of the virtual work revolution on office
routines and the resulting corporate travel activity, we developed a more
comprehensive framework coined the Virtual Tool Growth Matrix.14 Virtual Work Trends
The Virtual Tool Growth Matrix combines investor interest (gauged by VC
funding) and user interest (represented by cumulative growth in website
traffic) during the pandemic for the five defined virtual work categories we
looked at earlier. It provides a quantitative evaluation of the post-Covid lon-
gevity of various virtual work activities, thereby indicating which business
travel motives are most likely to return.
In other words, the four quadrants of the matrix classify the extent of busi-
ness travel substitution, offering founders and investors an evidence-based
view of the most attractive virtual work segments going forward.
This understanding is also highly relevant for travel providers like airlines,
allowing them to better prepare for a post-Covid future by evaluating which
software and travel motives can be used as a new complementary service
to business travel.
Looking at the bigger picture, the matrix tells us that the long-term adop-
tion of virtual tools—and their impact on business travel—will vary signifi-
cantly based on the interaction.
Additionally, the matrix shows that there are clear winners and some very
likely trends ahead. Namely, virtual event startups have captured both user
and investor attention, and in the coming months, we can expect these
platforms to keep expanding, cementing their utility for knowledge workers
and remote teams across the globe.
The matrix also reveals a discrepancy between user interest and investor
focus on different virtual tool categories. Specifically, it seems as though
most investors are predicting a return to in-person meetings—while users
are more open to long-term remote and hybrid work solutions, including
virtual alternatives to traditional office solutions.
Ultimately, the matrix reveals that users will more than likely give up office
huddling and watercooler chatter for the comfort of home, and for the flexi-
bility of permanent remote work. Only time will tell, of course—and we plan
on paying close attention to how things progress.15 Virtual Work Trends
Authors
Tran Dieu Ly Ivan Draganov
Research & Intelligence Analyst Senior Innovation Analyst
Lufthansa Innovation Hub Dealroom
dieuly.tran@lh-innovationhub.com ivan.draganov@dealroom.co
Lennart Dobravsky Louis Geoffroy-Terryn
Editor-in-Chief at TNMT.com Innovation Analyst
Lufthansa Innovation Hub Dealroom
lennart.dobravsky@lh-innovationhub.com louis.geoffroyterryn@dealroom.co
Disclaimer
This content is for general information purposes nor the Lufthansa Innovation Hub can warrant
only and should not be used as a substitute for the ultimate accuracy and completeness of the
consultation with professional advisors. Data data obtained in this manner. Results are up-
is current as of June 30, 2021. The Lufthansa dated periodically. Therefore, all data is subject
Innovation Hub and Dealroom have taken re- to change at any time.
sponsible steps to ensure that the information
contained in the report has been obtained from ©️Lufthansa Innovation Hub. All rights reserved.
reliable sources. However, neither Dealroom Please see TNMT.com for further details.
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