Augmented reality and virtual reality (AR/VR) dealmakers invested over $800 million (€705m) in Q2 2017, after a quieter first quarter. This rounded out over $2 billion invested across 27 AR/VR sectors in the last 12 months, as analysed in Digi-Capital’s latest Augmented/Virtual Reality Report.
While investment hasn’t hit the record peak of Q1 2016 (when $1.2 billion was invested in the quarter and $2.4 billion in the previous 12 months), the second quarter of this year was an investment record for a quarter when Magic Leap wasn’t sucking in giant amounts of cash.
The now familiar pattern for AR/VR investment saw the highest volume of investments from pre-seed through Series A, with chunky later stage deals accounting for most of the dollar value in the quarter (Improbable over $500 million, Unity $400 million – reported as half investment and half secondary share sale by employees). However Facebook’s Camera Effects Platform and Apple ARKit for iOS (and potentially AR optimised iPhone 8 later this year) look set to recalibrate investor sentiment on the sector as a whole. That shift in thinking might take a little while to filter through to the mobile AR developer ecosystem as it spins up to speed, so watch this space.
One pattern remains constant for AR/VR Dealmakers, with half of all investment continuing to pour into core tech companies. The four other big investment sectors were video, games, peripherals and smartglasses, which together with tech account for just under 90 per cent of all AR/VR investment.
Around $1 of every $10 was divided between solutions/services, education, social, advertising/marketing, navigation, location based, and eCommerce. The rest was spread across the smaller investment sectors of art/design, entertainment, business, lifestyle, music, enterprise/B2B, utilities, news, medical, sports, photo and distribution. Again as the impact of Facebook and Apple filters through the mobile AR start-up ecosystem, an explosion of new app types could lead to a rebalancing between investment sectors.
With Digi-Capital forecasting over a billion users and $60 billion revenue for mobile AR in 5 years’ time, the revolution started by Apple, Facebook, Google and others is set to change how the world sees the world. For AR/VR Dealmakers and their portfolio companies, picking the right opportunity with the right timing today could make them the geniuses and visionaries of tomorrow.