Augmented & Virtual Reality (AR/VR) Startups Building The Future

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Funding to AR/VR startups reached an all-time high in deals and dollars last year. But with few exciting deals in the past few months and an absence of positive news or apparent progress from stealthy AR headset startup Magic Leap, interest in augmented and virtual reality (AR/VR) technology seemed like it could be heading to the “trough of disillusionment.”

More recently, however, the tenor of the discussion has changed. PlayStation said its PSVR, a $400 headset released in October, was on track to sell over 1M units before April (the iPhone 1, for reference, sold 1.4M in its first 3 months and is regarded among the best tech releases ever). It also came to light that Apple allegedly has 1,000 engineers in Israel working on an AR headset.

  • Hardware / Enablement

    • Headset Makers—companies developing dedicated headset technology. Magic Leap, with $1.4B in funding, is far and away the most well-funded private company. The company’s headset, still unreleased, employs retinal projection to superimpose images mapped onto the wearer’s surroundings.

    • Position, Eye & Gesture Tracking—startups working on tracking hardware that is embedded in AR/VR headsets or mobile devices. Companies like Eonite Perception and Occipital make physical sensors, as well as computer vision software that can be embedded in AR/VR rigs (mobile or headset) to track users’ orientation.

    • Mobile Hardware & Enablement—startups providing head-mounted displays or other technology for mobile AR/VR. Many of these companies, like Merge VR, sell head-mounted displays (HMDs), mobile hardware, or software enablement for AR/VR apps. Wikitude, for example, makes vision software for AR mobile apps.

  • Development

    • Video Processing & Engine—image stitching, processing and game engines for VR. Game engines like Unity have vast application outside of AR/VR in gaming, but are increasingly being applied to VR. Graphics company OTOY helps render digital content and has attracted investments from corporates including HBO, Disney and AutoDesk.

    • Dev Tools—tools that aid the development and computing behind AR/VR applications. Fish Bowl VR provides usability testing, and Sixa, a high-performance cloud computing company, is aiming to make the VR experience wireless (many headsets today require a tether to a high-spec PC rig).

    • Camera & Capture—companies working on light field video or 360‎° capture.Lytro is a well-funded startup developing light field capturing cameras for VR content, and EmergentVR focuses on mobile 360‎° video capture.

  • Applications

    • Game & Content Production—studios producing AR/VR applications and games are big venture bets. CCP Games and Kite & Lightning both saw deals from smart money investors.

    • Content Platforms—platforms and apps where content is delivered (or indexed).Jaunt, Within, and NextVR are well-funded players in the space. (Also, media corporates are quite active here, and we’ve previously detailed where media companies are investing in AR/VR.)

    • Social—platforms for shared user experiences. Sequoia Capital and First Round Capital recently backed social platform Against Gravity. And LiveLike allows users to watch sports together in a virtual living room.

    • Ads—companies dedicated to advertising for the new computing platform. Startups like Vertebrae are working to natively integrate advertising into the VR ecosystem.

    • Education—startups applying AR/VR to education and academia. Nearpod, for example, uses mobile VR for interactive lessons in classrooms.

    • Commercial / Retail—enterprise AR/VR is taking off in real estate, furniture, and retail just to name a few. InContext Solutions, for example, helps imagine retail floor plans using VR. And Matterport facilitates real estate viewings using VR captured walk-throughs.

    • Healthcare—medical training and other medical applications. MindMaze is a well-funded company focused on AR/VR for neuroscience. The company develops HMDs, motion capture, and gesture control technology (for both AR and VR) with the goal of helping rehabilitation after stroke, spinal cord injury, and amputation.Psious uses VR for exposure therapy to overcome phobias.

    • Heavy Industry—headsets and mobile AR specifically tailored for industrial settings and field service. Daqri and Atheer are well-funded headset makers that focus on enterprise and industrial settings. Others like Scope AR do similar work in field service using mobile and tablets, employing AR to highlight parts on industrial equipment while connected to support experts in real-time.

  • Distribution

    • Arcades & Experiences—venture-backed companies like Two Bit Circus are putting AR/VR into consumers’ hands via pop-up arcade installations, while Dreamscape Immersive aims to bring VR to the multiplex. Dreamscape Immersive garnered investment from Hollywood mainstays like MGM, 21st Century Fox, IMAX, and Steven Spielberg. In addition, Comcast, the most active media corporate, made a bet on Spaces, which focuses on VR in theme parks