Editor’s Note: Christine Magee is an editor for CrunchBase.
While we struggle to set up a group Skype chat and create Google Sheets to organize our list of Google Docs, a new generation of venture-backed startups are building new tools to change the way we collaborate.
Investors are more excited about teamwork tech than ever. According to CrunchBase data, collaboration tech companies raised nearly $1 billion in venture funding in 2014 — a 65% jump from 2013’s total of $547 million. Last quarter’s $333 million is by far the highest amount of capital committed in a single quarter to date.
VCs closed some huge deals last year, including a $120 million mega-round for enterprise messaging startup Slack, but the recent influx of early-stage capital proves there’s still a need for better tools. Last quarter, the average seed deal weighed in at just over $1 million — more than two times 2013’s average of $430k.
Most founders behind the new wave of collaboration tech are well-acquainted with the flaws in the current system. Eric Yuan, founder and CEO of video collaboration startup Zoom, has more first-hand knowledge than most.
As the ex-Corporate VP of Engineering at Cisco, Yuan spent years building and iterating on enterprise videoconferencing app WebEx before founding Zoom. Zoom’s latest $30 million, from a list of investors including Jerry Yang, Qualcomm Ventures and Emergence Capital Partners, represents the largest round in the space this year.
While working on WebEx, Yuan identified a huge market opportunity for mobile device-enabled video conferencing. “It’s a mobile era, [yet] no other conference room solution can support that,” says Yuan.
Zoom unifies video conferencing and group messaging in a single tool so that companies can deploy a full capacity conference room with a single iPad.
“The adoption of mobile devices is creating a huge opportunity,” says Santi Subotovsky, partner at Emergence Capital. “Eighty percent of the world’s workforce is not sitting in front of a computer, but now they have mobile devices,” Subotovsky says.
Zoom is among a growing bunch of venture-backed startups aiming to bridge the divide between mobile and desktop collaboration functionality. Quip, a mobile productivity startup, has accumulated $15 million in venture funding to improve the document sharing and editing process across all devices.
“In some ways, the way people work with each other hasn’t really changed in 30 years,” says Kevin Gibbs, co-founder and Head of Engineering at Quip. “We have these amazing smartphones that are so powerful, but mostly what you can do with them is send an email — opening and editing documents on a phone is generally not a good experience,” says Gibbs.
Gibbs says that companies running on Quip range from small startup teams to giants like Facebook and Instacart.
But the tech world isn’t the only place where collaboration tech is simplifying teamwork. Yuan says that 30% of Zoom’s customers are in the education sector, and another 10% in health care.
“We’re seeing a new wave of vertically focused collaboration applications in industries where you need a specific technology in order to communicate,” says Subotovsky.
Subotovsky, who led the Emergence Capital’s recent deal for Zoom, says it was the largest check the firm has ever written. “When you look at these verticals, they can’t use off the shelf apps because they’re not meeting regulations, they need to use proprietary tools. If someone builds an application that meets those standards, they can build a huge collaboration suite,” says Subotovsky.
Remind, a communication service for teachers, students and parents, has raised $60 million in venture funding to build out a mobile-focused collaboration tool for the education market. Launched in 2012, Remind is currently used by 35% of U.S. teachers to send text reminders or administer real time quizzes to their students.
“We spend a ton of time listening to small nuances from teachers that make a big difference,” says Brett Kopf, founder of Remind. “For example, we’re very focused on safety — we track message history, you can’t ever delete a message, a teacher never sees a students number and a student never sees a teachers number. And if a teacher tries to send a message after 9pm, we send a message like ‘might 9:30pm be a little late?’”
Whether in a middle school, a hospital, or a startup office space, the next wave of collaboration startups will succeed by solving industry-specific problems.
“If you’re looking for something in a marketplace, like education or health care, you need something that works — a product that’s enterprise grade, but not necessarily at enterprise grade prices,” says Subotovsky. “In the next 5 to 10 years, we’re going to see the collaboration space blow up significantly.”