There’s little doubt that VR and AR are definitely going mainsteam, leading to a fourth wave of consumer technology change fed by massive investment in the sector such as the massive $794 million round for MagicLeap in 2014.
A record $2.3 billion has been invested in virtual and augmented reality startups in the last 12 months, with the third quarter of 2016 showing the ninth straight quarter of increased investment, according to a new report by Digi-Capital, an advisory firm that has been tracking this fast-growing tech sector. Check sizes for deals are averaging $9.3 million in the third quarter, and $16.4 million if seed deals are excluded.
The money is flowing in primarily from Sand Hill Road venture capital firms and corporate investors. This is a shift from the specialist VCs in the VR/AR, who spearheaded the early investments. Such big name financial investors as Fidelity, Qualcomm Ventures, KPCB, Sequoia, Softbank, Intel Capital, Raine and CITIC are leading deals. Alibaba is among the corporate investors that include Amazon and News Corp. that are joining the parade.
Commenting on the findings, Digi-Capital founder Tim Merel noted the smart money is looking to the long terms as the AR/VR market goes through the well-trodden path of hype, reality, liftoff and maturity. He predicts that VR will be bigger than AR and faster to take off.
Merel is on a panel of VR innovators and investors at Silicon Dragon Valley 2016, Oct. 5, in San Francisco.