2017 is shaping up to be another transformation year for augmented and virtual reality (AR/VR), which recently saw a major bump in deals.
Recently, AR/VR hype has been back on the upswing. Tech giants like Facebook and Apple are reputed to be allocating more than 1000 workers each to their respective AR/VR efforts. Meanwhile, movie studios, media companies and smart money VCs are all investing heavily into AR/VR.
Previously, we’ve mapped the AR/VR startup landscape, categorizing companies by where they sit in the full tech stack. Using CB Insights data, we looked at the latest funding trends to AR/VR startups.
Last year’s funding total was propelled mainly by a blockbuster deal to the secretive AR headset maker Magic Leap, which received a $794M Series C mega-round in February 2016. This year, mega-deals have been largely absent until this week, when VR simulation engine Improbable raised a surprise $502M in a Series B round. Before that deal, which included Andreessen Horowitz, Horizons Ventures, and Softbank Group, the company had raised only about $52M in total funding.
Overall, deal volume exploded in Q1’17, and if the pace continues, we will see 293 deals by year’s end, which would translate to a 47% increase. From a funding perspective, if the trend carries on then AR/VR will see $2.16B in funding this year, which would eclipse last year’s historically high total by 3%. That said, Improbable’s recent raise accounts for almost two-thirds of 2017’s year-to-date funding total. Prior to that round, the category was on track for a funding decline.
Notable deals in Q1’17 included lightfield camera maker Lytro ($60M Series D), e-sports streaming platform Sliver.tv ($16M Series A), and two deals to distribution startups Two Bit Circus ($15M Series B) and Dreamscape Immersive ($11M Series A). Two Bit Circus engineers immersive AR micro-amusement parks, and Dreamscape Immersive plans to open VR multiplexes, garnering investment from a host of Hollywood names like Warners Bros., 21st Century Fox, MGM, IMAX, and Steven Spielberg.
It’s important to point out that the quarterly chart, which only goes through Q1, does not include Improbable’s $502M round. As you can see from the quarterly funding numbers, there have been prior quarterly funding peaks, which were driven by mega-rounds to Magic Leap. Improbable’s round now ranks as the third-largest round of financing in the AR/VR category