Yearly Archives: 2017

The new reality of mobile AR and computer vision venture capital

Mobile AR from Apple (ARKit), Google (ARCore) and Facebook (Camera Effects) and computer vision/machine learning (CV/ML) are focusing the minds and wallets of VCs in Silicon Valley, China and beyond. The $2.5 billion invested in AR/VR so far this year ($1 billion in October and November alone) was balanced across AR and VR, but now mobile AR and CV/ML are the new hotness (as VR has cooled).

Digi-Capital advises a broad range of VCs and startup CEOs, so we spoke to a few friends about how the investment market has evolved. You can read what nearly 30 prominent VCs had to say below, but for the TL;DR crowd:

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$1 billion AR/VR investment in Q4, $2.5 billion this year (so far)

Startup leaders across the 27 AR/VR sectors in Digi-Capital’s Augmented/Virtual Reality Report and Deals Database raised $1 billion in the fourth quarter before the end of November. This is only the second time the billion dollar figure has been reached in a single quarter. Three quarters of a billion dollars went into big deals like Magic Leap’s $502 million and Niantic’s $200 million, with VCs investing another quarter of a billion dollars into smaller rounds. AR/VR startups have raised $2.5 billion since the start of January 2017, equaling the record for AR/VR investment in a single 12 month period (with 5 weeks left to go in the year).

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Digi-Capital Reality Network for December

Insight

The next Digi-Capital Reality Network is being held on Wednesday, December 6th from 6pm to 9pm. It is by invitation only for AR/VR CEOs, corporate divisional heads and VC Partners, with numbers limited to keep the signal to noise ratio high. The focus is on industry-wide opportunities and deal making (commercial deals, partnerships, investments, M&A) with all the chiefs eating, drinking and doing deals. The folks at Orange are hosting in San Francisco, with our thanks for their generosity and support.

The focus of this Reality Network is the opportunity from ARKit, ARCore and Camera Effects scaling the mobile AR market. The agenda is:

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How ARKit will make more money than ARCore and Camera Effects (for now)

Apple vs Google

[Note: The AR/VR market thesis, analysis and forecasts in the post have been completely replaced in Digi-Capital’s new Augmented/Virtual Reality Report Q1 2018, with an overview of the new work here]

After the iPhone X, iPhone 8 and ARKit launches, it’s clearer than ever that Apple owns the four waves of augmented reality. But Google’s launch of ARCore has the startup CEOs, corporates and VCs Digi-Capital works with confused (not to mention Facebook Camera Effects). While there are technical/performance differences between the platforms, they’re more alike than different from a UX perspective. But how much money they’ll make (and how they’ll make it) could be wildly different.

To understand the differences, we’re going to dig into each mobile AR platform’s addressable markets, adoption rates, user bases, ARPUs, In-App Purchases (“IAP”), premium apps, adspend and eCommerce sales (as well as ROW vs China).

(For all the underlying analysis, forecasts and data see Digi-Capital’s new Augmented/Virtual Reality Report)

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$1.8B AR/VR investment in LTM to Q3 2017

VRAR VC

$1.8 billion was invested across the 27 AR/VR investment sectors in Digi-Capital’s new Augmented/Virtual Report and Deals Database in the last 12 months to Q3 2017, with $300 million raised in the last quarter. This has been typical of AR/VR quarterly investment for the last 18 months, as Q2 2017’s outsize $800 million came primarily from two large deals. So Q3 wasn’t a dip, so much as Q2 was unusually high. The third quarter also marked the beginning of a transition from a previously VR driven investment market to a new mobile AR driven market. Where sentiment on VR softened in the first half of 2017, VC/corporate investors are now actively looking for mobile AR investment opportunities.

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