Wearables have bounced back in 2016, thanks to Magic Leap

It feels like we've been hearing for years that it was going to be the year of the wearable. In 2014, 17 million of them were supposed to be shipped, and this year a quarter of all Americans were supposed to be wearing one. Basically, for a long time we've been hearing about how everyone is going to own a wearable.

Yet, the numbers haven't really beared  that out, at least not when it comes to venture capital. There was only $370 million was invested in wearable companies in 2015, down a significant 63 percent from the $1 billion invested in the year prior. 

Is that a sign of wearables fatigue, or just a fluke? The numbers so far this year point to the latter.

Through the first three quarters of 2016, there has already been $1.45 billion invested into the wearables space, according to data from CB Insights. That's already a 31 percent increase over the $1.1 billion invested in 2014, and there's a whole other quarter still to go.

CB Insights projects that the total funding will reach $1.9 billion by the end of 2016, making it the largest year ever. 

Interestingly, even with the amount of funding set to increase by 344 percent year to year, the number of deals will barely budge. There were 91 deals in 2015, and there have been 70 so far this year, with a projection of 92 for the year. That would actually be lower than the 99 investments in 2014.

It will also significantly increase the average deal size. In 2014 it was $11.2 million per deal; in 2015 it was $5 million. This year it will be $16 million per deal.

Biggest deals

When looking at this year on a quarterly basis, one thing stands out: Q1 is the most well funded quarter for the wearables space ever.

What accounts for that is the $793.5 million raised by Magic Leap in February. That followed a $542 million Series B round in October 2014, which is also credited for the huge amount of funding that went into the space that year.

It may be less that wearables funding dropped in 2015, and more than it wasn't propped up by Magic Leap like in 2014 and 2016.

Other big deals during this year include Jawbone, which raised $165 million in January; Thalmic Labs, which raised $120 million in September; Razer, which raised $75 million in February and Chrono Therapeutics, which raised $47.6 million in September.