In partnership with Upload, Inc., ChinaVenture, and MoguraVR, the Virtual Reality Venture Capital Alliance today released its latest report on VR/AR worldwide investment as well as the outlook for the next year.
Readers of UploadVR can download the full 51-page report for themselves:
Highlights from the report include:
- In 2017, a record high of ~$3B has been invested in VR/AR globally. Despite perceived slowdown in capital market, the overall investment was still up 12% vs. 2016, and 3 times vs. 2015
- Investment is relatively concentrated in seed/angel and late-stage. Series A share is declining, caused by long validation cycle for product-market-fit of VR/AR startups, limited bridging capital and deal size inflation of seed/angel round
- US is still the primary location where VR/AR investment took place (~45%), and China is following closely (~25%) with investment opportunities unique to the market (e.g. location-based, supply chain, education). Besides leading as investment destination, Asia is also a key source of outbound funding for the global VR/AR industry
- As hardware shipment was growing slower than expectation, investors’ interests shifted from hardware and content (which rely on consumer penetration) to tools and technologies which can apply across content and platforms, and enterprise services which have faster product-market-fit validation and monetization cycle
- Corporate investors is the rising force in 2017 as more enterprises were exploring the use of VR/AR technologies to enhance existing business cases. These investors often see the application value of startups’ products and can also provide strategic resources. Megafunds (e.g. Temasek, Fidelity, EDBI) who typically invested in large size private equity deals also started participating in VR/AR (e.g. Magic Leap, Improbable) this year
- Asian capital is gaining significance and the way they engage is also changing. After gaining industry knowledge and deal channels as LPs, some are now more active in direct investment. Funds specialized in cross-border investments (e.g. Colopl Next, Outpost, Danhua, etc.) are also very active
- The industry is still in its early stage and there are limited exit channels and limited cases of exits. Most exits were under $100M with <20x return for seed/angel round investors
Formed in 2016, the VRVCA is a close-knit membership comprised of the top VR/AR investors in the world with $18bn+ USD deployable capital. It invests in Virtual Reality, Augmented Reality and Mixed Reality startups of any size from anywhere, and meet four times a year across global locations in United States, China and Europe.
This is partner content that has been produced in conjunction with VRVCA.