VR/AR Breakdown: VCs Investing Heavily to Make it a Reality

- September 25th, 2017

Though VR and AR have recently propelled to notoriety, the roots of the idea have been existing for over half a century.

Virtual reality (VR) and augmented reality (AR) are among the most trending topics in the technology world. VR creates a simulated environment for users and helps them immerse into a 3D scene than actually watching it on a screen in front of them.VR creates a completely artificial environment, while AR uses the already existing environment and superimposes it with new and useful information.

The History

Though VR and AR have recently propelled to notoriety, the roots of the idea have been existing for over half a century. Case in point, the Sensora Machine was introduced in 1957. In the machine, the viewer sat on a vibrating chair and simultaneously watched a movie through a viewer.
More recently, after Facebook’s (NASDAQ:FB) Oculus acquisition in 2014, Facebook CEO Mark Zuckerberg introduced a new VR experience that overlays avatars of your Facebook friends who are in the different parts of the world into your own VR environment so you can virtually hang out together. Facebook’s aim is to create a way that will let you interact with your friends as if they are in the same room.

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Global venture investments in VR/AR

Since 2010, 707 startups from around the world have secured funding of $4.5 billion via 1,179 deals. Despite  the media scrutiny AR and VR have received, the numbers are quite humble. Magic Leap, a US-based startup which is on the verge of becoming one of the largest comapanies VR, has secured over $1 billion in funding. This deal alone totals roughly one quarter of the industry’s funding.
Tech giants like Facebook, Samsung (KRX:005930), Sony (NYSE:SNE), and Microsoft (NASDAQ:MSFT) have stood out to support the VR and AR projects, which will surely attract venture capitalists to make a record amount of stakes in VR/AR this year.

Companies and their funding from venture investments

In 2016, Seed rounds totaled 65 percent of all rounds in the VR/AR area. Compared to the entrenched software-as-a-service (SaaS) industry–where only 37 percent of all rounds were of seed type–we can clearly see that the VR/AR industry is still in the development phase.
Since its founding in 2011, Magic Leap has raised roughly $1.4 billion in total funding. There is a steep drop in the funding raised by its competitor, Blippar which comes in second at $150.6 million.
Here’s a closer look at companies, when they were founded, how much funding they’ve raised, and who their top investors are:

Company Founded  Total venture funding raised Investors
Magic Leap 2011 $1.4B Kleiner Perkins Caufield & Byers
Qualcomm Ventures
Andreessen Horowitz
Blippar 2011 $150.6M Qualcomm Ventures
Landsowne Partners
Daqri 2010 $132M Tarsadia Investments
NextVR 2009 $116M Comcast Ventures
RSE Ventures
Time Warner Investments
MindMaze 2012 $110M Venture Kick
EPFL Innovation Park
Roblox 2006 $103M ALTOS Ventures
First Round Capital
Jaunt 2013 $101.3M Highland Capital Partners
Redpoint Ventures
GV
zSpace 2007 $87.2M Artiman Ventures
Meta 2012 $72.7M Horizons Ventures
Y Combinator
VTF Capital
CCP Games 1997 $69.3M General Catalyst
New Enterprise Associates

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Illustrious startups backed by venture capitalists

Magic Leap
Magic Leap is, indeed, one of the most companies in the AR industry. The Florida-based AR company is developing a set of eyewear that will interact with real-life scenarios and overlay images and videos over them. It had raised $1.4 billion from major investors including Kleiner, Perkins, Caufield & Byers and Andreessen Horowitz.
Blippar
Blippar is a London based start up that has combined Artificial Intelligence with AU to design an app that provides users with additional about objects users encounter in their everyday lives. The company has raised over $150 million from major investors like Qualcomm Ventures and Landsowne Partners.
NextVR
Founded in 2009, NextVR is striving towards developing a VR platform for improving live sports and the overall entertainment experience. The company has funded $116 million in total and is valued at approximately $967 million.
Leap Motion
Leap Motion, formerly known as OcuSpec, develops technology that helps its users interact with computer devices using hand gestures and finger movements. The company posted its Series B funding of $30 million in 2013, and was valued at roughly $306 million.

Major investors in AR/VR

From the most active investors in the field of AR/VR, corporate venture firms dominate the competition. Five of the top 10 investors are corporate venture firms, including: Intel Capital, Qualcomm Ventures, GV, Comcast Ventures and Samsung Venture Investment.
There are only a few newer firms that are leading the game. Three of the top four venture capitalists have been founded within the past five years. They are Rothenberg Ventures, Presence Capital and The Venture Reality Fund. Note that all the investments below exclude the accelerator rounds.

Investor Investments Investments in last 12 months
Rothenberg Ventures 24 9
Presence Capital 19 12
The Venture Reality Fund 18 4
Qualcomm Ventures 12 3
Comcast Ventures 11 7
Colopl 11 6
Google Ventures 11
500 Startups 9 3
Andreessen Horowitz 9 2
Samsung Venture Investment 9 1

 

 Conclusion

There is a mixed opinion in the market regarding the future of VR/AR. Some think that their popularity is going to rise swiftly while according to others, it is slowly going to crawl its way towards success
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Securities Disclosure: I, Prashant Sharma, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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