The Future of Work: Selected insights, opportunities and market maps
From distributed infrastructure, applied AI over to remote team culture enforcing platforms: The future of work space is vast and ever evolving. We are still adapting to the new way of working and a lot of pain points remain to be resolved offering massive opportunities for entrepreneurs to come up with impactful solutions. Companies at least are ready to spend money on such solutions: A study by Station F during Covid found that 22% of the companies across stages (pre-seed to Series C, N=956) wanted to increase budget for remote working tools. Another interesting data point is from KPMG’s CEO outlook 2021 (n=1325, across 11 major markets). It found that only 21% of CEOs plan to downsize their physical footprint (down from 69% in 2020), but over half plan to prioritize flexibility (hybrid models).
One thing is clear: The way we work is changing. A 2021 study by Future Forum found that 93% of knowledge workers want a flexible schedule and 76% want flexibility in where they work: Tech enabled solutions are needed in order to allow for this transition. For me, tools related to the future of work can be defined as:
Tech solutions that help people and businesses do their work efficiently in a distributed and digital world.
Covid-19 has been a big accelerator of this transition, however the way we work will continue to evolve even in a post-Covid world. The question one should ask is not only where the work is being done (remote or office), however how the work can be done effectively (using tech solutions) in the future.
It seems evident that there will be a continued increase in demand for software solutions in the next years that make remote and hybrid work efficient and enjoyable for everyone. I wrote this piece in order to present the major trends that will impact the future of work tools as well as investigate categories that I am particularly excited about. I am interested in talking to (and investing in) founders that are building a company in the FoW space and hope to increase my reach within the space using this report.
This report is split in 2 parts: Part 1 will summarise some key macro trends and highlights of each analysed category. Part 2 will investigate each category in greater detail as well as present a market map for reach.
I have also compiled a public list on Airtable of 150+ startups that I have looked at and liked while researching this topic.
Scope and disclaimers of the publicly available list of startups:
- This piece builds on and is inspired by existing research. The links can be found at the bottom.
- Focus is on early stage Europe based startups that were mostly founded after 2016 and raised less than $5m. Some exceptions are made by referring to international leaders in order to make the subcategory positioning clearer.
- Many companies could be attributed to multiple categories and/or subcategories, such as collaboration and productivity. I decided to choose the one I thought made the most sense.
- The list of start-ups and categories is non-exhaustive. I simply included the ones I have come across and like.
PART 1: Key trends and categories
Key future of work trends:
- Huge digitization across all (traditional) industries in the coming 5 years. Reducing workplace density using automation and AI in areas where pre-Covid a lot of people came together (warehouses, grocery stores, call centres, manufacturing) is inevitable. In Germany alone this year (2022) >300k more people will retire than enter the labor market. In 2029, the yearly gap will be 670k, adding up to 5m cumulative by 2030. The consequences of not adopting digital tools will be detrimental to the economic progress of many countries.
- Stellar UI/UX is essential. By 2028, almost 60% of the workforce will be millennials and Gen Z with incredibly high UI/UX standards. Startups can compete with legacy players by simply offering prettier and easier to use product. The consumerization of IT is here (as predicted by Microsoft CEO Steve Balmer in 2012).
- Independent workers are on the rise. With a wave of creators and freelancers arriving, driven by the rising remote work demands as well as the popularity of the creator economy, we can expected a lot of startups offering solutions that will make this target audience’s work life easier (personal finance, collaboration tools, hiring platforms…)
- Remote first companies will become even more popular. These are likely to become more successful models than hybrid remote work in the long run as they offer full flexibility on location, are often at advantage when building a companywide coherent culture and have a lower cost structure.
Top categories and selected opportunities & trends within:
- Organizations’ tech spending is up by 57 percent in 2021 compared with 2020. The category’s growth is fuelled by VCs investing massively: In the first 10 months of 2021, total funding stood at $7.5 billion for the year — more than 2019 and 2020 combined. A trend that will continue in the next 2 years.
- Successful hiring platforms not only offer “local”, however also integrate features that make remote and even freelance hiring easy.
- A strong company culture will be a driver of top talent recruitment and retention, especially in a remote/hybrid world. Tools helping companies achieve this will thrive.
- Learning and development will become increasingly important. The World Economic Forum estimates that 50% of employees will need to be reskilled by 2025. Tech platforms are on their way to help people learn new skills, especially on the b2b side.
- In a world of hybrid office setups, offering flexible furniture, office and equipment rental will become hugely demanded. Already now, 55% of remote workers who didn’t use a co-working space prior to the pandemic are considering joining one in the future. Companies solving administrative related tasks (booking, renting etc) to this will thrive.
- Payroll tools for international and remote hiring: Easy to use features around tax, compliance and FX rates are the main differentiators that will be looked for.
- Target client: The growing numbers of freelancers will need sophisticated yet easy to use personal finance tools.
- 47% of IT leaders say that the greatest ROI from automation occurs within operations. This will be especially for relevant for distributed teams.
- 50% of business leaders say that they’re planning to accelerate the automation of repetitive tasks within their organization. On top of operations, compliance related tasks will be another growing use case given its repetitive nature.
- One of the main opportunities I see is targeting more SMBs and traditional industries: This will be the decade of digitization for them. Less staff, more automation.
- Atlassian estimates that 73% of the average meeting participant did other work during a meeting and 45% felt overwhelmed by the number of meetings they attended. There are $1800 annual productivity costs per employee due to unnecessary emails. Productivity at work still has a long way to go!
- Startups developing virtual personal assistants are becoming increasingly important to a large number of people (not only C-level).
- Search is another subcategory getting lots of attention: Allowing people to find a set of data or information in a fast way often using a “zero click” approach. Given nowadays’ large amounts of recorded meetings, notes and data, startups in this space will continue to raise a lot of attention (from users and investors). Especially for distributed and remote teams, search tools seem to be extremely relevant.
- Asynchronous communication tools will thrive for remote work, given everyone’s varying schedules.
- In a remote first company, a virtual office may well become essential in order to foster informal communication between employees. Startups in this space benefit from an additional tailwind: The arrival of the metaverse.
- Bringing desk less workers online by developing tools that allow them to communicate effectively and securely with their white-collar workers is a trend that will continue to grow.
- Within the collaboration category, the unbundling of incumbents such as Microsoft office and Gsuite seems to be a strong trend with opportunities to build leaders in each sub category (Notion, Airtable…).
- Startups developing collaborative solution for company & client interaction present a big opportunity as people realise that many in-person meetings are not necessary and existing digital interaction still have lots of friction and too many iterations (emails, calls, etc).
PART 2: Deep dives & market maps of each category
Human resources tech companies’ main goal is to automate a variety of historically time consuming functions such as hiring and perks. However, in recent years the expanding scope of HR has fuelled the category’s growth. HR now includes people analytics, learning and wellness as well as company culture related efforts. These relatively new subcategories are expected to grow the most in the coming years compared to HR’s core functions. The software HR market is estimated to reach $34 billion by 2028, almost doubling in size compared to today and growing at 10% CAGR.
Some companies offer a 360 solution which tries to tackle all or most of the above (Personio) and others focus on solely one segment (Remi.so offers a platform aimed at building culture for remote teams). SMBs are expected to become the fastest growing segment as they move from pen and paper (or excel) to proper HR platforms. Overall, the key for startups, especially when targeting SMBs, is to offer a stellar UX and little implementation time. This will drive the adoptions rates among less tech native companies.
- People Analytics: Tools offering a data driven approach by tracking and analysing HR KPIs.
- Culture: Platforms offering various solutions with the common goal of building a strong company culture, remote or in office.
- Perks: Employee benefits made easy.
- Coaching: Developing engaged employees with online coaching.
- Mental health: Solutions allowing employees to take care of their mental health.
- Learning: Workplace learning platforms that help guide and upskill employees.
- Hiring: Platforms that act as HR operating systems making the hiring process more efficient: Sourcing, interviewing, screening and recruitment.
- Remote talent: HR platforms focused on cross border and remote talent hiring.
People analytics is a data driven approach to HR. The main goal is to improve employee productivity, engagement and retention by analysing a wide set of data and displaying the results in dashboards or reports. The best start-ups in this space identify clear patterns in the loss of employee engagement or retention and suggest actionable insights. These can help managers to analyse their team’s performance while not spending time together in an office. A good example is Zoios.
Company culture is one of the biggest factors of startup success or failure. If employees enjoy working at a company, they are much more likely to be productive, engaged and stay. This has become even more obvious during the pandemic, where remote work became the standard and where unfortunately often employees feel isolated. I believe that startups in this space are seeing (and will continue to see) a surge in demand.
Hiring remains arguably the most important function of HR teams. However, the war for talent has become even more intense given that some companies allow employees to be based anywhere in the world. Successful platforms not only offer “local” hiring, however also integrate features that make remote and even freelance hiring easy (think of compliance, tax, payroll and other regulatory hurdles). A good player in the space is Oyster.
Lots of companies in the HR category as a whole have other tech companies in mind as potential clients. I believe that we will see a strong growth in the demand from non tech companies (blue collars and generally more traditional SMBs). Another opportunity around targeting a more specific target clientele in my opinion would be a company focused on hiring last mile delivery drivers (Uber drivers, Gorillas riders etc). Also, as described above, startups offering solutions that help companies build strong company cultures will boom: Especially culture building platforms for hybrid teams. A great example would be Jurnee, a platform making team events easy, virtually and in person. Learning is also an interesting space: It’s supposed to be the 2nd biggest sub category within HR and big enough for multiple leaders in my opinion. Research from McKinsey suggests that through 2030, the time spent using advanced technological skills will increase by 40–50% in the U.S. and Europe. Some large companies have already taken action: At L’Oréal, over 7k employees have completed an upskilling program on skills such as search engine optimization, digital media allocation and digital analytics in collaboration with General Assembly. I am convinced that SMBs will have to follow in the near future. Also, jobs requiring IT and programming skills are expected to grow another 60%. Instead of only focusing on hiring, companies will want to use platforms that help them to up and reskill their existing employees.
This category is most closely related to making the whole middle and back office’s life easier. Think about this: JP Morgan developed a system (COIN) that reviews commercial loan agreements in a few seconds that would have taken about 360,000 hours of human lawyers’ time. I believe that organising office spaces also falls into an administrative task. Co-working spaces will boom in a remote work. 54.9% of remote workers who didn’t use a co-working space prior to the pandemic are considering joining one in the future. Additionally, commercial property landlords are predicted to allocate 10 to 25 per cent of their assets for flexible leases.
- Virtual mailboxes: The future of admin is paperless.
- Payroll: Software to make payroll fully digital and easy.
- Back office & accounting: Platforms to digitize invoices, spend management and bookkeeping.
- Next gen office/office management: Platform for flexible office furniture procurement and desk booking.
Payroll management overlaps with the HR category, however it is mainly the accounting department that has to deal with the administrative part of it. Although companies in this space have been around for a while, recent new players have focused on making it easy for companies to take care of payroll for their remote (and international) employees. Features around tax, compliance and FX rates are the main differentiators (Lano, Boundless).
In a world of hybrid office setups, it makes sense to rethink our offices. Companies in this space offer flexible furniture rental (Lendis) and change the way we think about furniture procurement. Think about how this approach can impact cash flows for a fast growing startup: Not having to worry about spending a lot of upfront cash on furniture that might become obsolete or having to be moved once changing to a new office.
Invoice management for suppliers and expense management for employees post business trip has always been very much paper based. The best tools offer not only digitalization of this paper mess but full automation with AI (deep learning such as image recognition for invoice management). A great example would be Yokoy, which recently raised a €22m Series A (one year after their small seed round).
One target clientele to look out for are creators and freelancers. Do these people have the right tools at their disposal in order to focus on what really matters to them (ie create)? Think about payroll, tax, compliance and even renting “office” equipment (cameras, studios etc) for this target customer. In a distributed and remote environment, the freelancers will thrive even more and will need tools to help them manage their personal finances.
A lot of business processes that still involve human intervention can actually be fully automated. At least, that’s the promise of workflow automation. A few examples of these businesses processes are confirmations, claims, requests, billings or data entries. Many repetitive tasks can be automated by workflows, hence why I believe it is part of the future of work. One clear benefit of using this technology is simple: The more you automate, the less room for human errors exist. It also saves time and helps employees to focus on things that really matter. The market is expected to reach $18 billion (CAGR 13%) by 2026, whereas today sits at around $10 billion. Automation is a key driver of corporate profitability: Between 2008 and 2018, the operating profits of the S&P500 increased by 206%, but the number of employees only increased by 22%. This likely shows that people were replaced by tech.
- Compliance: Automating compliance related checks and documentation.
- Analytics: Automating data science with no/low code tools.
- Client workflows: No/low code solutions for companies to guide clients through signups, invoices, forms, quotes and more.
- Operations: Removing manual & repetitive coordination work such as document labelling, task instructions, approval requests and more.
Operations is a great use case that can benefit of workflow automation. 47% of IT leaders say that the greatest ROI from automation occurs within operations (Salesforce survey). It ticks all the boxes; repetitive tasks, time costly and core to the business which makes it important to run smoothly in order to scale fast. A good example of a startup in this space is Nextmatter, which essentially provides a to-do list that writes and updates itself, helping tasks to be attributed to the right people and systems automatically. This is very helpful in a hybrid or remote environment.
Compliance is another great use case where workflow automation can be of great help to humans. Think about simple use cases. As a business owner in the transportation industry, you are responsible that your employees have valid driving licences. How often do check that? Well Sawayo developed a nice feature within their wider product offering that requests employees to regularly update and confirm that they are compliant in this aspect. Another good compliance example would be automating checks that you are GDPR compliant (Bearer).
Client workflow is a more common use case within the workflow automation field. For signup flows, I am however wondering to what extent the arrival of digital wallets (sovereign identities) such as Metamask may replace these altogether. I am bullish on this in the long-term. In the short to medium term, companies like Arengu offer a great no code alternative to companies who do not want to dedicate a whole tech team to take care of sign up flows.
83% of IT decision makers believe workflow automation is essential to digital transformation (McKinsey). We can see companies following, as budgets allocations have increase massively in recent years towards automation software.
One of the main opportunities I see is targeting more SMBs: This will be the decade of digitalisation for them. User-friendly interfaces are paramount (Beau is great at this), as well as API integrations with all sorts of data sources (Zappier). Often these smaller companies are left behind when it comes to workflow automation as they are used to their old ways. The beauty of workflow automation is that one can apply it to almost any industry in order to automate business processes.
The core of productivity tools’ promise is to help an employee or group of employees become more efficient. In general something is efficient if nothing is wasted and all processes are optimized. Productivity tools can help increase efficiency by reducing the time or resources (input) needed to produce the same (or greater) output. For example, scheduling or calendar tools (Calendly) reduce the time input required by the user, however the outcome is the same: Meetings are scheduled. Another way to look at this are tools that produce greater outcome be it in quantity or quality. A basic example of this would be Grammarly which helps you write more qualitative emails. Often, productivity tools are a combination of both together (Superhuman).
- Calendars: Tools to help you organise your calendars efficiently and making scheduling easy.
- Email: Anything that helps you to organise your inbox or write better emails.
- Project & task management: Resource allocation & estimation and dynamic to-do lists.
- Meeting management: Tools that help you to have efficient meetings. Preparing, note taking during and following up post meetings.
- Voice: Transcribing calls using AI and analysing every interaction to come up with insights.
- Virtual PA: Replacing the traditional office PA using a part-time remote one or fully automating it with an intelligent virtual assistant that is trained using AI.
- Search: Software solutions that help users find information or data in the cloud with the least clicks possible.
The main reasons why project management tools are being used are to better project timeline estimation as well as better resource allocation which results in a higher level of efficiency, hence why it makes sense to include them in the productivity category. Adoption is highest for IT services, financial services, manufacturing, accounting and construction sectors across all company sizes. The top three most important factors when evaluating different tools are functionalities, price and ease of use. Task management software are usually platforms that help keep to-do lists and daily tasks organized and in one place. I do feel that this category is already saturated and arguably has already “popped” with many great companies out there such as Asana or Monday.
Using virtual personal assistants (VPA) is a great way for busy professionals to become more efficient without having to pay a full salary of an actual PA. VPAs can provide various services to entrepreneurs, freelancers or businesses from a remote location such as digital marketing tasks, scheduling appointments and managing events to personal errands. An Intelligent Virtual Assistant (IVA) is a machine learning based system capable of understanding human language and answering questions that people ask. Chatbots are navigational, whereas IVAs are intelligent search engines. IVAs listen to and observe behaviours, build and maintain data models, predict and recommend actions. They can be deployed in several use cases which include personal, customer and employee assistants.
I believe VPA and IVA to be the most fascinating category of productivity tools as it is fast growing, is becoming increasingly relevant to a large number of people (no longer only relevant for C-levels) and still lacks category leaders. With people working from home, this may be especially useful in order to remain organised. Another category that I think will become ever more important is Search, which allows people to find a set of data or information in a fast way often using a “zero click” approach (Deepset.ai). For a distributed workforce this is vital in order to foster collaboration and help on board new employees.
Communication is perhaps one of the more obvious major categories of future of work with already a few established winners (Zoom, Slack, Hopin…). Communication is key in a remote first, hybrid or fully office based work environment, as it relates to the interaction and exchange of information.
- Messaging & chat: Mainly used for text based communication between employees.
- Virtual office: Allows remote teams to have an online workplace with meeting & focus rooms, social lounges and more.
- Video: Communication via video.
- Noise reduction: Tools to help reduce unwanted background noises when on calls.
- Events: Solutions that help organising and hosting online events.
- Customer communication management: Platforms that helps employees engage with clients via various channels.
- Screen sharing: Tools that drive communication by enabling screen sharing.
One can differentiate between asynchronous and synchronous communication tools: Synchronous communication happens in real-time, whereas asynchronous communication happens over a period of time. It seems that remote work, given everyone’s varying schedules and reduced face to face interaction, thrives on the latter.
Another differentiation one can make is employee communication tools and customer communication management (CCM) tools. Effective employee communication is a strong driver of collaboration, culture and productivity. SMEs are projected to be the fastest growing segment in the coming years, even though enterprises account for the largest revenue share. The rise in desk less workers will also drive a strong growth in demand for multi-platform employee communication tools. The customer communication management market’s major drivers will be the fact that companies need to continue connecting to and building relations with their customers in a digital world efficiently. There are many different communication channels (SMS, emails, interactive docs, social media etc) and all of these are used to retrieve, deliver and store various important documents. CCM tools are also important factors when it comes to mitigating client churn, increasing engagement and acquiring new ones. Since Covid, f2f communication between client and customer has decreased significantly, boosting the growth of these tools. This will most likely continue in the future, given that it often reduces the cost, increases efficiencies due to automation and allows for the collection of valuable data. Sometimes certain tools offer both (internal and external communication).
I believe that there is lots of room to develop more solutions in the screen sharing and messaging space, the latter more specifically for desk less /blue collar workers (think effective communication tools for manufacturing or construction sites). Screen sharing solutions could be targeted at specific audiences (such as Drovio for developers) or target at specific use cases (such as Surfly for high touch customer on boarding).
A lot of collaboration is done digitally nowadays. Most of these tools have been around for a while but their utility and value has further increased during the pandemic when work from home became the status quo. The market size is expected to reach $17.2 billion by 2026, up from $12.7B today (6.3% CAGR).
- Company & client: Tools enabling efficient document sharing, updating and collaborating for industries that require multiple company & client iterations.
- Design: Collaborative software to make things beautiful and be creative.
- Wiki/Note taking: Knowledge sharing and management tools.
- Data & Spreadsheets: A more user friendly and collaborative version of Excel, integrating multiple sources of data.
- Digital white boards: Helping teams collaborate together by brainstorming, planning and mind mapping.
- Developer: Platforms allowing software developers to collaborate together more easily.
Knowledge collaboration is most closely related to the unbundling of the “incumbents” such as the Microsoft office suite as well as Gsuite. New players often start by focusing on one subcategory instead of building a direct competitor to the incumbents. Not only do we see a strong rise of knowledge sharing/collaboration tools within organisations as a result of remote work, but it can also be seen much more as a smart tool to grow communities (for example using a wiki in order to share knowledge publicly). However, one shouldn’t underestimate that some of the newer players can still learn a lot from the almighty Gsuite. I recently read a comment I already had heard about Notion: “comments should be visible without clicking” or “track changes editing should be possible”. Both of these features are possible in Gsuite.
Other collaboration tools that target more specific use cases such as design, data, software development and company & client interaction. These solutions have been around for a while but have really hit it off during the pandemic (for example Figma raised $250M during the pandemic). This very broad subcategory also seems to have already quite a few established players (Coda, Pitch, Github).
White boards have been around for collaboration purposes for decades. They too have found their way into the digital helping teams collaborate together by brainstorming, planning and mind mapping. Good software solutions in this space involve the following functionalities: Unlimited canvas, collaboration features, attachments, presentation option and mobile device accessibility. Of course one should remember that whiteboards may benefit being targeted to specific audiences such as educational purposes or product teams.
I think company & client interaction solutions are a huge and growing market (our portfolio company Collato). Think about the constant email or call iterations between creatives, architects or lawyers and their clients. Certainly more solutions will emerge for these use cases over time.
Targeting by industry, I believe healthcare to still offer significant opportunities. Note taking around patient observations is often still done on paper and using applied AI, one could truly revolutionize the value of such notes. Another more specific example would be developing more user friendly and advanced ELN platforms (electronic lab notebooks). These help scientists record all of their research data, sign and witness experiments in regulatory compliance. From a collaborative point of view, allowing scientists to share and use these notes across borders is hugely valuable. Labstep does this well, but I am certain more opportunities are available as I found most solutions to feel very old school. Europe is a solid research and pharma hub and should therefore develop its own tools! (Benchling in the US seems to be a leader).
Another opportunity in the new hybrid world are idea management and innovation platforms giving everyone a voice no matter if they are in the office or at home. GAM Investments has used such a platform successfully during the pandemic: 327 ideas were submitted globally, of which 48 have been actioned so far. I am certain that more specific use cases or target industries will emerge for such platforms in the future.
Overall I am very bullish on startups operating within the future of work space. I believe that these companies significantly contribute to the digitization of the 2020s. They will attract tons of interest from users as well as investors. The most notable categories for me will be HR disruptors and tools facilitating administrative tasks.
The HR space has seen its second wave of disruption only recently and this will not stop anytime soon. The HR suite has become so vast and gained enormous attention: After all, people are the most important contributors to any firm’s success. Investors have also realised that bets in previously thought small and niche sectors can pay off. For example, Peakon (employee feedback platform) has been acquired for $700m in 2021. Especially newer subcategories such as employee analytics, culture building platforms and remote hiring will continue to emerge. Legacy players (such as Cornerstone, SAP, Workday) will want to acquire these in the future in order to remain competitive.
Startups tackling administrative inefficiencies will also attract tons of interest in 2022 and the medium term. The new way of working has accelerated this, with companies offering payroll solutions for remote employees gaining serious traction as well as helping freelancers with their personal finances. Back office automation will also become inevitable with AI becoming powerful enough, yet easy to implement for most businesses to see a real value add.
In terms of wider macro trends, I also firmly believe that stellar UX will allow startups to win over lots of customer when competing against legacy players. Even if the value add might be similar, a great UX is a strong driver of end user adoption. This trend is further accelerated by the fact that Gen Z and millennials will soon represent the large majority of the knowledge worker talent pool. Lastly, I am of the opinion that remote work will remain an option as employees seek flexibility. I do however believe that startups wanting to build a strong company culture should either embrace office life or strongly encourage a remote first policy (vs simply allowing employees to wfh).
Previously published research on this subject that helped me greatly in writing this:
- Future of Work 2021 Update by Elise Stern (Eurazeo)
- Mapping “The Future of Work” Startup & Investor ecosystem by Pietro Invernizzi (Stride VC)
- Mapping Workplace Collaboration Startups by Merci Victoria Grace (Advisor & angel investor)
- The new wave of productivity by Peter Specht (Creandum VC)
- Remote Work Market Map by Elaine Zelby (SignalFire VC)