the state of augmented & virtual realityaugmented reality (ar): a hybrid reality tech that...
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THE STATE OF AUGMENTED & VIRTUAL REALITYAnalyzing AR/VR investment trends in the first half of 2016
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Nicholas Pappageorge
@NpappaG
www.cbinsights.com 6
ABOUT THE PRESENTER
Tech Industry Analyst, CB Insights
Focuses on Internet of Things, AR/VR, Space, Drones, and Industrial IoT
Published research and data analysis has been featured in Forbes,
Fortune, Bloomberg, Wired, Quartz, Re/Code, and Business Insider, among other major media outlets
Previously held research role at 3D printing company MakerBot
Industries
Graduate of Hamilton College
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Private market activity in AR and VR
What we know about Magic Leap
Corporations competing in AR/VR
Where startups see opportunity
Enterprise and industrial use cases
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IN THE NEXT 20-25 MINUTES, WE’LL COVER…
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STATE OF AR/VR:MACRO TRENDS IN THE GLOBAL LANDSCAPE
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Since 2012, AR/VR companies raised:
$3.3 BILLIONacross
375 DEALS
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INVESTMENT INTO PRIVATE AR/VR COMPANIES SET FOR RECORD YEAR
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At the current run rate, both deals and dollars into AR/VR companies are set to reach record levels in 2016.
Source: CB Insights.
Top Deals Since 2012
Magic Leap
$794M // Series C
Magic Leap
$542 // Series B
MindMaze
$100M // Series A
NextVR
$80M // Series C
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Q2’16 SEES DEALS AND DOLLARS FALLING
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After a massive Magic Leap deal, Q2’16 hardly compared (even to quarters before the mega -round).
Source: CB Insights
Top Deals Q2’16
Meta
$50M // Series B
OTOY
$37M // Series D
The Virtual Reality
Company
$23M // Series C
Lumus
$15M // Series B
Within
$13M // Series A
Magic Leap
$542M
Series B
Magic Leap
$794M
Series C
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AR/VR IS STILL DOMINATED BY EARLY STAGE DEALS
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Since 2012, early stage rounds (seed and Series A) have accounted for 69%-83% of deals to the space.
Source: CB Insights
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GEOGRAPHY: U.S. LEADS, CHINA AND UK TRAIL
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The United States saw the bulk of deals, followed by China and the UK. Canada and France saw 4% and 3% of deals, respectively.
Source: CB Insights, percentages are rounded up.
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MOST ACTIVE INVESTORS
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Interestingly, 4 of the top 8 AR/VR investors are corporate venture arms. Rothenberg Ventures tops lists, and also has a VR -specific accelerator. Presence Capital and GV tied for second most active.
Source: CB Insights, ranked by number of unique companies invested.
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INVESTOR ECOSYSTEM
Accelerators
Vertical specific
VCs
Corporate VCs
Generalist
VCs
Note: select investors not ranked or exhaustive.
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INVESTOR ECOSYSTEM CONTINUED
Virtual Reality Venture Capital Alliance
38 investors, Headed
by President
of VR at Vive
Source: VRVCA, TechCrunch
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WHAT IS AR / VR (AS WE DEFINE IT?)
Augmented reality (AR): A hybrid reality tech that combines the real world with a rendered one. Magic Leap‘s headset, still in development, is an example in the category. (Mixed-reality, a merging of real and virtual worlds, is used somewhat interchangeably and bucketed here)
Virtual reality (VR): a virtual world that is completely rendered. Examples here would include Jaunt, which enables cinematic VR.
Both/Other: technologies that enable both AR and VR. An example is Eyefluence, which offers eye-tracking technology that can be applied to both virtual and augmented reality systems.
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“Over the next 10 years, the form factor's just going to keep on getting
smaller and smaller, and eventually we're going to have what looks like
normal-looking glasses that can do both virtual and augmented
reality… As a matter of fact, when we get to this world, a lot of things
that we think about as physical objects today, like a TV for displaying an
image, will actually just be $1 apps in an AR app store.”
Mark Zuckerberg
CEO Facebook
Source: The Verge
Image Source: Facebook
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AR VS. VR: DEALS FELL Q2’16
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VR deals have been trailing downward in recent quarters. In Q2’16 there were 23, whereas before in Q4’15 VR deals hit a peak at 37. AR and Both/Other deals have remained relatively flat.
Source: CB Insights
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AR VS. VR: BOTH ON TRACK FOR DEAL GROWTH
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VR comprises the bulk of deals currently, though all types are slated for year-over-year growth in 2016.
Source: CB Insights
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ASIDE FROM Q1’16, MOST RECENT QUARTERS DOMINATED BY VR
FUNDING
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Virtual reality startups saw more funding than AR startups in 4 of the past 6 quarters. The massive influx of investment Q1’1 6 can mostly be attributed to Magic Leap.
Magic Leap
$794M
Series C
Source: CB Insights
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AR VS. VR: REMOVING FROM MAGIC LEAP YEARS, VR TAKES MOST
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Dollar-wise, AR is has taken an enormous share, nearly all of which went to Magic Leap.
Magic Leap
$542M
Series B
Magic Leap
$794M
Series C
Source: CB Insights
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WHAT DO WE KNOW ABOUT MAGIC LEAP?
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Source: CB Inisghts
WELL…NOT A TON
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Source: CB Insights
THEY’RE HIRING
Help wanted: “Principal Healthcare Systems Engineer”
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Source: CB Insights Business Social Graph
THEY HAVE A WIDE WEB OF INVESTORS, INCLUDING MANY IN MEDIA
Business Social Graph
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USE CASE #1
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Median early-stage fintech deals ere $4.6M in Q2’16, hitting a 5-quarter high and 53% increase over Q1’16.
Source: CB Insights
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USE CASE #1
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Median early-stage fintech deals ere $4.6M in Q2’16, hitting a 5-quarter high and 53% increase over Q1’16.
Source: CB Insights
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Source: CB Insights, Inverse
GRAEME DEVINE, CHIEF CREATIVE OFFICER & VP OF GAMES, APPS, AND
EXPERIENCES AT MAGIC LEAP
“[Devine] also describes successful products as things
that pass the five mile rule: Things that you would go
back for at home if you forgot them, but only realized
five miles away. Smartphones he says, often pass this
rule; Apple Watches do not. Magic Leap wants us to
never feel like we should be separated from our
augmented reality headsets.”
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THE CORPORATES SMELL OPPORTUNITY
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FACEBOOK-OCULUS KICKED OFF THE CONVERSATION
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Oculus - FB
Acquisition
March 2014
Source: CB Insights Trends
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MEDIA CORPORATES JUMPED IN
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Source: CB Insights
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M&A HAS SEEN AN UPTICK
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Source: CB Insights
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PATENT SNAPPED UP BY PUBLIC AND PRIVATE COMPANIES
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Source: Envision IP
Microsoft has filed the most AR/VR patents in the past 6 years, applying for a total of 611. But Magic Leap made big moves last year, filing 164 patents in just 2015 alone.
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ANNOUNCED
PLANS
WHO KNOWS?
(BUT PROBABLY
UP TO
SOMETHING)
SHIPPING
HEADSETS
MAJOR COMPANIES MAKING HIGH-END HEADSETS
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@cbinsights #arvr
Source: The Economist, Digital Trends, Vanity Fair
• Facebook acquired Oculus for $2B
• After developer versions, Oculus began
shipping the consumer-grade Oculus Rift in
late March
• Partnered with Samsung for Gear VR,
powered by Samsung Galaxy smartphones as
display
• Overall vision could be to create a metaverse
(virtual world)
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TECH NO LONGER HOLDS A MONOPOLY ON SELF-DRIVING DEVELOPMENT
37
Source: CB Insights Trends
• Other high-end headset available today (along
with Rift)
• Headset employs laser sensors to traverse
15' x 15' space (a much larger area than
others), giving a more room-scale sort of
gameplay
• Strategic partnership with gaming house
Valve may give it edge in content and
hardware development (Valve also
developing its own hardware)
• Recent survey found developers prefer
working on the Vive platform, beating out
Oculus
Source: ExtremeTech, TechRadar, Wall Street Journal
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@cbinsights #arvr
Source: UploadVR, Wall Street Journal, IB Times
• Hololens headset became available to
developers (for $3000) in March, consumer
release TBD
• Targets enterprise applications, has
commercial partnership with Volvo (seeing
applications in product development and for
selling cars)
• Partnered with Autodesk for facilitating
industrial design
• Partnered with Intel on Project Alloy, Intel’s
mixed-reality headset
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@cbinsights #arvr
Sources: Apple Insider, UploadVR, Wall Street Journal, Financial Times
• CEO Tim Cook: "AR can be really great. We
have been and continue to invest a lot in this.
We are high on AR for the long run, we think
there's great things for customers and a
great commercial opportunity. So we're
investing.“
• Acquisitions suggest mobile-focused AR:
bought facial recognition company Faceshift
and smartphone AR company Metaio, and
Flyby Media, which provided the image-
recognition in Google's tablet-based mixed-
reality initiative Project Tango
• Apple is also said to be prototyping VR
headsets
• Recently hired a leading VR researcher.
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@cbinsights #arvr
Source: The Verge, Wall Street Journal, Engadget
• Releasing PlayStation VR, high-end gaming
headset that will compete with likes of Vive
and Rift
• Lower price-point ($399 atop $299 PS4
console)
• Huge gaming footprint, the best selling major
video game console (40M PS4s sold)
• Beefing up specs on PlayStation 4
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@cbinsights #arvr
Source: Wall Street Journal, VentureBeat, TechCrunch
• Recently unveiled Project Alloy, untethered VR
headset with built-in gesture control for
merged reality experience
• Does not require high-end gaming PC
• Partnered with Microsoft for Windows
Holographic OS and Project Alloy’s hardware
• Intel is open-sourcing its Alloy hardware so
that “anyone can combine the Project Alloy
hardware with Windows Holographic
platform.“
• Acquired Movidius (9/6/2016), a computer
vision company with many AR applicationsImage Source: The Verge
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ANNOUNCED
PLANS
WHO KNOWS?
(BUT PROBABLY
UP TO
SOMETHING)
RELEASED
MAJOR TECH COMPANIES IN MOBILE AR/VR
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• Auto
@cbinsights #autotech
Source: Wall Street Journal, TechCrunch, Fortune, Wall Street Journal
• Pioneering Google Glass project was
ultimately unloved by consumers
• Moved into low-end mobile VR with Cardboard
• Reported in May that 5M Cardboards were in
hands of consumers (distributed widely via
partnership with NY Times); Cardboard App
has hit 50M downloads in Play store
• Soon announcing plans for mobile VR
platform Daydream
• Investor in well-funded AR startup Magic Leap
• In addition to its low-end mobile VR initiative
(and retooling Android OS to handle VR),
Google is reportedly working on a standalone
headset that would not require a tether to a
PC or game console
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@cbinsights #arvr
Source: UploadVR, Wall Street Journal, IB Times
• Partnered with Oculus shortly after FB
acquisition in deal that granted them early
access to Oculus’ software platform
• Gave away Gear VR headsets with Galaxy
preorders
• Poised to be among the most-owned mobile
VR headsets. In May, reported more than 1M
had used the Gear VR
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THE STARTUP ECOSYSTEM
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ONE VISION OF AR/VR INVESTMENT
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The majority of AR/VR’s use case in 2025 may still be for gaming and entertainment, but enterprise use cases still could repr esent nearly half of the market.
Source: Goldman Sachs
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DEALS ALREADY LEAN TO BUILDING BLOCKS & INDUSTRIAL APPS
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CB Insights data breakdown on deals says 55% is already going to infrastructure tools (building blocks like dev tools, gaming engines, gesture & motion tracking) along with Commercial/Industrial use cases.
Source: Mark Linao, Technicolor Ventures, includes all AR/VR deals through Feb 2016
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USE CASE #1 - GAMING
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Driving most of the category currently, gaming headsets are currently hitting the mainstream with the fall release of PlayStationVR. The Viveand the Rift are mainly being adopted by gamers.
SurviosTotal raised: $4.25M VR-based gaming content maker and immersive hardware/software developer.
UsensTotal raised: $25.6M Mobile-based positional tracking for AR and VR gaming experiences.
NianticTotal raised: $25M Mobile AR games studio (most famous for Pokemon Go title).
Resolution GamesTotal raised: $6M VR game studio.
CCP GamesTotal raised: $50M Icleand-based VR gaming studio focused on massively multiplayer games.
AltspaceVRTotal raised: $15.5M Social-focused VR platform that enables gaming and communication between users.
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USE CASE #2 - RETAIL
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VR and AR technologies could transform retail from both the supplier and the consumer. Examples here could be visualizing fur niture in a home, or virtualizing walkthroughs of shopping floor plans.
Image Source: Barco
AugmentTotal raised: $1.8M Mobile AR-based enterprise platform for marketing and sales.
InContext SolutionsTotal raised: $19.9M VR shopping and retail solutions for store simulations.
VividWorksTotal raised: $1.6M Mobile and tablet-based AR tool for designers and manufacturers to help customers visualize interiors.
SpaceViewTotal raised: $19.9M Mobile AR sales enablement platform.
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USE CASE #3 – LIVE EVENTS
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Live event streaming enabled by VR will make for a more immersive watching experience.
Image Source: NextVR
NextVRTotal raised: $110.5M VR-based content capture and broadcast platform.
JauntTotal raised: $100.5M Content platform focused on “cinematic VR” experiences.
VokeTotal raised: $24.45M Live event VR platform.
LiveLikeTotal raised: $5.1M VR platform for sports broadcasters.
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MOST WELL-FUNDED AR/VR STARTUPS
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Magic Leap tops the list by a longshot, but VR motion capture and content platforms are among the most well-funded.
Source: CB Insights
CompanyDisclosedFunding
Description
$1.4B Stealth AR headset maker
$118.5M Swiss AR and VR motion capture developer
$110.5 Live events experiences in VR
$100.5 Cinematic VR content platform
$99M Mobile AR visual search app
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WHERE AR/VR GROWS WITHIN INDUSTRY AND ENTERPRISE
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INDUSTRIAL USE CASE #1 - 3D DESIGN
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AR and VR will enable faster and more collaborative industrial design, and allow different departments and clients to visualize sketches. Autodesk, which is gearing its design engine for AR/VR capabilities, is working with clients like Volvo for design process an d for consumer visualization.
Image Source: Daqri
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USE CASE #2 - FIELD SERVICE & DOCUMENTATION
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Being able to see workflows, take video to connect with experts, and review compliance documents or technical drawings—all while hands-free—will be a big value to industry.
Image Source: Microsoft Hololens
MetaTotal raised: $73.3M Enterprise collaboration-focused AR headset developer
AtheerTotal raised: $20.5M Enterprise-focused smart eyeware.
DaqriTotal raised: $15M Helmet-embedded industrial AR headset.
LumusTotal raised: $15M Enterprise-focused smart eyeware.
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USE CASE #3 - MEDICINE TRAINING AND THERAPY
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AR and VR could revolutionize the visualizing of medical imaging, help with surgical simulations, and be used directly for therapy (such as virtual exposure to alleviate phobias).
Source: Surgical Theater
Surgical TheaterTotal raised: $4.25M VR-based surgical simulation and education.
PsiousTotal raised: $1.2M Exposure therapy for patients suffering from phobias.
MindmazeTotal raised: $118.5M Gesture/motion tracking for major gaming applications, as well as immersive VR for early motor rehab post-stroke.
Innovative Imaging Technologies (dba Reacts)Total raised: $4M Medicine-focused video collaboration platform.
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WELL-FUNDED COMPANIES IN ENTERPRISE / INDUSTRIAL AR
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Source: CB Insights
CompanyDisclosedFunding
Description
$73.3M AR headset maker for enterprise
$20.5M Enterprise-focused smart eyeware
$15M Enterprise-focused smart eyeware
$15M Helmet-embedded AR headset
$2M Tablet and glasses-based AR solutions
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