Venture Capitalists (VC) and corporate investors spent $2.3 billion on Virtual Reality/ Augmented Reality (VR/AR) startups last year, more than three times the $700 plus million invested in 2015, according to Digi-Capital’s new Augmented/ Virtual Reality Report and Deals Database. This represents a 300 percent investment growth over twelve months.
Some of the biggest name investors include Alibaba, Warner Bros, Google, Qualcomm, Fidelity, J.P. Morgan, Morgan Stanley, T.Rowe Price, Wellington, CIC, Intel, Amazon, Fidelity, CITIC, NetEase, Softbank, 21st Century Fox, MGM, Lenovo, Tencent, Comcast, Samsung, and HTC.
Additional information from the report incudes:
- Augmented Reality had a good year with completing hardware players Magic Leap, ODG, and Meta combining for over $900 million in investments.
- Magic Leap raised $793.5 million at a $4.5 billion valuation at the start of last year for its AR hardware player. However, even though it has taken in more money than any other single company in the space, last year Magic Leap accounted for only around $3 of every $10 invested in VR/AR.
- ODG brought in $58 million, and Meta brought in $50 million, raising the AR investments closer to $4 of every $10.
- The next largest sector was VR/AR services/solutions, which took just under $2 of every $10 invested.
- Unity brought in the largest investment with its $181 million at a $1.5 billion valuation.
- Neural VR platform maker Mindmaze also exceeded expectations when it raised $100 million at a $1 billion valuation, sliding into second place.
- VR Video/360 Video companies managed to bring in over $1 of every $10 invested, despite the insistence of experts that 360 video isn’t volumetric VR video.
- In this sector, NextVR came in at the top with $80 million, 360fly came in second with $40 million, and Baobab Studios brought up third place with $25 million.
- VR hardware startups raised nearly $200 million despite the presence of Facebook, Samsung, Google and others already in place.
- Both VR/AR peripherals and VR games sectors raised over $100 million each.
- VR/AR app developers (outside games) and VR/AR advertising/ marketing startups each raised only around $80 million.
- These last two may well be big drivers of long-term value, but it looks like investor thinking is still evolving as the market develops beyond its earliest stages.
However, record breaking numbers are always a tough act to follow. In the light of 2016’s mixed year in terms of performance and VR/AR’s new trajectory driven by mobile AR, it will be even more important to see how VC and corporate investors respond in 2017. But, according to Digi-Capital, no matter what happens in the short term, the long term looks bright for VR/AR investors and the startups they’re fueling.