AR/VR sectors raise a record $1.1B in only two months

Investments surge 67 percent from 2015, though 72 percent come from one investment

2016 may be the year artificial intelligence and virtual reality investments hit their stride, as investments have already topped the billion-dollar mark.

In just the first two months of this young year, the two sectors combined have raised a total of $1.1 billion, according to data from Digi-Capital.  That's up 67 percent from last year.

In all of 2015, AR and VR startups raised $658 million. And in 2014, $771 million was raised, though $542 million, or 82 percent of the investments made, went into Magic Leap. 

In like vein, 2016 numbers are a bit skewed as well, with 72 percent of the amount raised, or a whopping $793.5 million raised, was due to Magic Leap, again. 

Still, that leaves another $300 million or so that was invested in other companies, and even excluding Magic Leap, Digi-Capital says that investments are up 20 percent from the same quarter last year, when $250 million was invested.

Some of the categories that have been investments this year include AR/VR solutions/services, VR hardware, advertising/marketing, distribution, video, peripherals, apps and games.

The AR/VR space is poised to break out in a big way in the coming year, and a sure sign of that is the young age of the startups in the space, of which 75 percent raised angel, seed or Series A rounds in the fourth quarter of last year.. Only three percent of the deals during that quarter were Series C or D. 

AR vs VR

Where VR is closed and fully immersive, and puts users inside virtual worlds, AR is open and partly immersive, and puts virtual things into users’ real worlds. Basically VR is something you wear on your face, like Oculus VR, which will limit the user's visability, while AR is like wearing something along the lines of Google Glass, where you will still be able to walk around and see the real world around you.

The two spaces, together, are expected to be worth $150 million by 2020, up from what looks to be around $5 billion this year.

Numerous companies are ready to take bets on these spaces, but none more than Facebook, which made its first entry by purchasing virtual reality headset maker Oculus in 2014. It has also manifested itself into a big push into 360-degree immersive video.

Oculus starts shipping its headsets in March. Mark Zuckerberg believes that it will be the next big thing, and that this purchase has Facebook on the ground floor.

"If you look at how people spend time on all computing platforms, whether it’s phones or desktops before that, about 40% is spent on some kind of communications and media," he said recently.  "Over the long term, when [Oculus] becomes a more mature platform, I would bet that it’s going to be that same 40% of the time spent doing social interactions and things like that. And that’s what we know. That’s what we can do."

In addition to virtual reality, Oculus is also said to be working on augmented reality as well.

(Image source: magicleap.com)