Founded in 2016, the Virtual Reality Venture Capital Alliance attracted 49 of the world's top investment institutions and invested in assets of $18 billion. In terms of investment, it is very interested in VR/AR/MR and AI projects from any location and financing stage, and will hold investment meetings in China, the United States and Europe on a regular basis four times a year. It aims to promote the industry's growth by discovering, sharing and co-investing in the world's most innovative and influential VR/AR content and technology companies. Today, the Alliance released the latest report on VR / AR global investment and the 2018 outlook report.
Some of the contents of the VR / AR Global Investment Report and the 2018 Outlook are as follows:
Overall financing trend - VR/AR investment nearly tripled between 2015 and 2017
In the context of the industry's “capital winter†argument, the global investment in VR/AR reached a record high of nearly US$3 billion in 2017, up 12% from the 2016 financing, and 3 times compared to 2015.
In terms of investment rounds, industry funds and financing events are mainly concentrated in the middle and late stages and seed/angel rounds; A rounds account for a gradual decrease in overall project and financing ratios, and the main reasons for this phenomenon include: VR/AR startups in the early stages of the industry In the case of unclear industry direction and lack of data, it will take longer to verify the value of the company and products; insufficient transitional capital in the early and middle periods; and an increase in the average financing of the seed/angel round.
In the industry sector, due to the large average transaction size, tools and underlying technologies (40%) and hardware projects (35%) still account for the majority of the total investment. In terms of the number of financing projects, the financing projects of enterprises/vertical industries have doubled in the past two years, becoming the most active area for investors; in the content industry such as games and entertainment, investors have become more cautious. The investment is concentrated in the head studios of each category.
Geographically, the US is still the main VR/AR investment location (about 45%), followed by China (about 25%) and has many unique investment opportunities (such as offline experience stores, upstream supply chains, education). In addition to being a major investment destination, Asia is also a major source of funding for the global VR/AR industry.
Annual Investment Focus - Head project continues to receive huge financing, Round A is the main threshold for most teams
During the year, there were a number of huge transactions (such as Magic Leap, Improbable, NianTIc, etc.), which accounted for 35% of the total investment in the VR/AR industry, and the head effect was obvious; the corporate/vertical industry also generated a lot of attention. Investment project.
Due to lower-than-expected hardware shipments, investors' focus has shifted from early hardware and content (more on consumer penetration) to tools and underlying technologies with long-term investment value and across content and platform applications, as well as the ability to quickly verify The value of the product and the revenue generated by the enterprise/vertical industry sector.
In order to successfully obtain financing, some start-ups choose to adjust their company positioning (such as extending from VR to AR/MR, from focusing on C-side or developers to facing B-side), and trying other alternative financing channels (such as crowdfunding, ICO, etc.).
For VR/AR start-ups, we recommend that the company try to control the valuation and increase the amount of money (supporting 18 months or more) in the seed/angel round, setting very specific and clear indicators as the verification threshold for the company's value, regardless of How big is the vision, how likely is the technology application, focus on a few subdivisions for vertical commercialization, and when appropriate, choose a new device platform that is more suitable for your product form and target customer group (such as one machine, mobile AR, etc.).
Capital Market Overview - Traditional venture capital shots are more cautious and new capital continues to flow in
In 2017, the industry's most active 15 investors invested in about 150 projects; the world's most active institutions include: Vive X, Presence Capital, The Venture Reality Fund, Tokyo VR startups, precision capital, Colopl Next, etc.; Domestic active investment institutions include Bertelsmann Asia Investment Fund, Songhe Capital, Dingxiang Investment, UCCVR and so on.
The mainstream traditional venture capital funds (such as Sequoia, IDG, Qiming, Jingwei, etc.) have made some early layouts of the industry in the past, and from the current point of view, these investment projects have not achieved significant success, so these investments in the short term People will continue to pay attention to the VR/AR industry but will be relatively cautious; while venture capital funds (such as Vive X, UCCVR, etc.) that focus on VR/AR are still actively investing in VR/AR projects, but they are already critical in the industry. The node has made a lot of investments, so it faces the challenge of avoiding overlapping with existing portfolios when looking for new targets.
As more and more industries realize the value of VR/AR technology in business, investors with industry backgrounds have become the main force of investment in 2017; these investors are more aware of the relevant start-ups than ordinary financial investors. Value, after the investment can also provide more strategic and industrial resources; and some do not usually participate in the venture capital business, focusing on late private equity transactions or the secondary market giant funds (such as Temasek, Fidelity, CIC, etc.) because they saw The possibility that the VR/AR industry has produced high-valued unicorns (such as Magic Leap, Improbable, etc.) is also beginning to invest in this area.
Unlike LPs such as traditional parent funds, many of the investors behind VR/AR special funds come from industries (such as technology, games, entertainment media, etc.) or government backgrounds; funds from these backgrounds continue to flow into new funds, and there are Long investment cycle, more specific understanding of VR/AR, and a clear preference for some investment targets.
Globally, Asia's capital position is becoming more and more important, and the way of investing has become more active and active. From the early stage of LP participation in European and American funds to accumulate industry knowledge resources and project channels, to directly invest in cross-border projects, and even There are funds that specialize in overseas investment (such as Colopl Next, Precision Capital, Danhua Capital, etc.).
Project exit – talent/technical acquisition remains the main exit form in the short term
The industry is still in its infancy, and exit channels and cases are very limited; most exits are less than $100 million, and early investors are under 20 times.
As many technology giants are actively deploying VR/AR and need to reserve technology/talent for their key products, we expect talent/technical acquisitions (such as Apple's acquisition of eye tracking company SMI, Google's acquisition of game company Owlchemy Labs) in the next few years It will still be the main form of exit for start-up projects; in addition, some medium-sized strategic mergers and acquisitions will continue to occur (such as Acer's strategic acquisition of StarVision's controlling shareholder StarVR, Microsoft's acquisition of VR social application Altspace, etc.).
Outlook for 2018 - capital markets and ecological growth continue, with new investment opportunities
Most investors interviewed believe that the total investment in VR/AR for 18 years will increase or remain at a similar level compared to 17 years:
Technology giants such as Apple, Google, Facebook, and Microsoft will continue to invest in the industry and announce new VR/AR product plans; the release of Player One and other mass media are expected to be more consumers and investments. Continuation of interest in VR/AR continues.
Further growth in the capital market will depend on the popularity of mobile AR, whether there will be another giant financing event like the Magic Leap level during the year, and the market sales response of VR all-in-one and AR glasses.
Looking ahead to 2018, some potential emerging investment opportunities include:
Mobile AR: applications in social, gaming, retail, etc.; underlying technologies such as ARCloud; 3D modeling.
AR glasses: upstream suppliers (such as optical components, camera modules, etc.); industrial-grade enterprise solutions.
VR all-in-one: lightweight content (light interaction, suitable for fragmentation and high frequency use); underlying technology (inside-out location tracking, compression/streaming technology, computer vision, etc.); hardware device fragmentation solution (eg Middleware and cross-hardware platforms for cross-device development).
PCVR device upgrade: high-quality offline experience store and solution; enterprise/vertical solution that is highly sensitive to hardware device user experience.
5G: cloud computing; streaming media content and technology; LBS applications.
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