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The spaces are ready to bust out in 2016, with the launch of the Oculus headsets
If 2016 is the year that augmented reality and virtual reality finally take off, then 2015 was the year that the world finally started paying attention.
That includes venture capitalists, who made a record number of deals in the space in the fourth quarter of last year, according to data out from CB Insights.
The 43 deals made in the AR and VR spaces topped the 36 deals made in the third quarter. Three out of the four quarters in 2015 saw at least 30 deals in AR/VR startups, when there had been no more than 15 prior to that.
Overall, AR/VR startups raised a total of $658 million in equity financing in 2015, across 126 deals, down from $771 million across 52 deals in 2014. It should be noted that amount raised in 2014 was inflated by a single investment, however, when Magic Leap raised $542 million round. That single investment totaled more than 82 percent of all the money raised that year.
There was $238 million invested in the fourth quarter, the second highest amount ever, up from $171 million the prior quarter. It was dwarfed only by the fourth quarter of 2014, when Magic Leap raised that gigantic round.
Some of the rounds in Q4 included two Asian companies, ANTVR, which raised $46 million, and DeePoon VR, which raised $30 million. In the U.S. the biggest deal was NextVR, a developer of live and on-demand virtual reality experiences, has which raised $30.5 million.
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 have raised angel, seed or Series A rounds. Only three percent of deals were Series C or D.
VR is closed and fully immersive, while AR is open and partly immersive. Where VR puts users inside virtual worlds, immersing them, AR puts virtual things into users’ real worlds, augmenting them. Basically VR is something you wear on your face, like Oculus VR, 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 in 2016.
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.
(Image source: popherald.com)
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