What specific Ubuntu version are you running in a VM? If you run the command:
ls -la /lib/modules/`uname -r`/kernel/net/ipv4/ipip.ko
Do you see the ipip kernel module? For example on my machine, I see: -- $ ls -la /lib/modules/`uname -r`/kernel/net/ipv4/ipip.ko -rwxr--r-- 1 root root 15984 Dec 7 2014 /lib/modules/3.17.5-1.ax25.el6.x86_64/kernel/net/ipv4/ipip.ko --
--David