This morning, Hopin, a London-based startup building virtual events technology, announced that it has raised a $40 million Series A led by IVP. According to the company, Salesforce's corporate venture arm Salesforce Ventures also took part in the round, as did a number of its prior investors, including Slack's venture capital group the Slack Fund, European venture groups Seedcamp and Northzone, and U.S.-based Accel.
The round comes after Hopin had raised relatively modest capital, including a $6.5 million round in February of this year.
Hopin is busy scaling. The company has seen its employee base grow from eight to 60 this year, and targets 200 by the end of 2020, according to CEO Johnny Boufarhat. The firm is staffing up as usage of its technology expands, with the "number of monthly attendees of events" hosted using its technology growing from 16,000 in March -- when COVID-19 lockdowns were accelerating -- to 175,000 in May, according to the company.
That's the sort of growth that venture capitalists flock to, checkbooks in hand. Even better, Hopin's current marketing costs are around zero, as there's simply more groups that want to host events on the company's platform than it can handle.
Why does a virtual event technology provider have a bottleneck? "Hopin is a venue," Boufarhat told TechCrunch in an interview, meaning that its customers need support to make sure things go well when they use the software. If a piece of business technology hiccups for a few minutes, Boufarhat explained, citing CRM as an example, it's not the end of the world. If a Hopin instance has issues, he explained, 1,000 people could be impacted, causing them to judge both the hosting group and his company.
Hopin's technology allows events to recreate the traditional in-person conference, online. This includes features that allow hosts to have digital equivalents of real-world event locations and activities, like expo centers, various stages and networking capabilities. This mirroring of an IRL get-together, online, could make digital events more attractive to attendees who have become accustomed to a certain method of congregating.
A history of growth
Hopin first raised money in October of 2019, during a period of rapid expansion. According to Boufarhat, his startup was seeing about 60% growth, month-to-month. At that time the company was operating with reduced entry, only accepting a portion of market demand. After the October round was complete, the business kept growing, allowing it to collect more data on its product and how it was used.
That information led to its February, 2020 seed round. Back then the company was seeing revenue scale roughly along with expenses, allowing it to be "nearly profitable" during the period, according to its CEO. For venture capitalists, seeing a company with more demand than it can handle grow, while also not losing much -- if any -- money, is attractive.
Hopin's quick round in early 2020 then was not a surprise. The same confluence of factors, including usage growth and revenue expansion, are also what came together for its most-recent Series A.
COVID-19 was an accelerant for Hopin, it appears. As the pandemic spread, the company realized that companies were going to switch from in-person events to webinars, which, in its view, aren't great. So, it moved to make Hopin more available, earlier, than planned.
Now with more money than it has had to-date, Hopin can likely accelerate its hiring, and onboard more clients than before. That means more virtual events, and more revenue for the company. It will be interesting to see how the company's gross margins shape up over time, and what percentage of the events that it helps host recur. If the margins are good, and events periodic, the firm could argue for a SaaS multiple long-term.
Looking toward the future, it will be interesting to see how the company approaches the realm of digital worlds, and if there's space in its current model for more VR-style experiences. And there are other questions in the distance, including what happens when a vaccine is eventually found for COVID-19? Do events go back to normal, or do they wind up splitting the IRL-online divide, giving Hopin and similar companies a place in conferences for good?
Firms like Teeoh and even Eventbrite also want a piece of the virtual event market, so Hopin won't have a walkover. That said, there's little indication yet that virtual event hosting will be a single-winner category. Given the sheer TAM of the events world, there's probably room for several.
How quickly Hopin raises again should give us our next signal regarding the pace of its growth. More when we have it.