An overview of the market and 10 startups to watch
Within 5 years, Magic Leap raised over $1B in funds, with an impressive 793,5 M C Round from Alibaba, Google, Andreessen Horowitz and KPCB, among others. With their revolutionary digital light field technologies, Magic Leap captured the interests of many people and redefined what is possible in the field of AR (read this MIT review for more insights). Even though AR still seems futuristic, investors are ready to bet on its potential. According to a study by Digi Capital, AR is projected to generate revenues of around $120 billion by 2020.
Nevertheless, there are still many challenges to overcome. Google Glass was not able to capture a big audience and opinions on market potential are split. There are many potential applications, from retail, to education, gaming and enterprise, and some startups are already generating revenue but AR still has a long way to customer adoption and regular basis use.
In this blog post, I made an overview of the market, including big players, AR/VR leaders, the investment environment, AR headsets, and highlighted 10 early stage startups that I find most interesting.
How big is the market today?
According to Digi Capital, the AR field is supposed to reach revenues of $120B by 2020, but how big is this market today?
Big brands such as Disney are already working with Aurasma. Their platform allows users to create, manage and track augmented reality experiences through an easy to use drag-and-drop web studio. Blippar (mobile image recognition and augmented reality platform) is already boasting over 1000 brands in their portfolio. Metaio (pioneers in AR and computer vision) is already limiting their licenses to Fortune 100 companies after leading the way into helping developers offer AR solutions for their customers. Even though revenues are still not available publicly, most of the big b2b AR platforms are already generating money. In a different study, Juniper Research concluded that revenues were set to exceed $1B in 2015. With hundreds of startups ready to capture this potential, Digi Capital already pinpointed many as AR/VR leaders at the end of last year (listed below).
Nevertheless, the field is still in its infancy. According to CB Insights, most investments are made in early stage companies, with nearly 75% of deals being made in companies at the Angel or Series A stage.
The investment environment
CB Insights pointed Q4 of 2015 as the all time high in AR investment. Big players are investing large amounts into AR: Apple acquired Metaio, HP acquired Autonomy and its AR platform Aurasma, Google and Qualcomm heavily invested in MagicLeap, and Microsoft is growing its Hololens community. Amazon is also working on its own internal projects with patents on augmented reality living rooms. Alibaba, eBay, Walmart and Mastercard, among others are also invested in the field. Startup acquisitions already are happening within the bigger AR players. As an example, Blippar acquired one of the top players in this field, Layar, after having raised over $99M in funding. The AR headset company Meta also raised $23M in 3 rounds and launched its second headset.
According to CB Insights, top investors in the field include Rothenberg Ventures, BoostVC, Google Ventures and Intel Capital. Among accelerators and incubators, Techstars and YC are ready to bet on AR & VR while companies like Qualcomm and Samsung are also ready to take the plunge.
According to Digi Capital, a large portion of the projected 2020 revenues will come from AR headsets and hardware. Already an interesting market on its own, headsets vary in price from a couple of hundred dollars to up to $15,000.
With Daqri headsets, industrial customers can augment their workforce with 4D work instructions, thermal vision, data visualization and remote expertise, maximizing productivity, creating safer work environments and minimizing errors. Daqri raised $130M and recently acquired UK-based holographic technology company Two Trees Photonics in an effort to compete against Hololens and Magic Leap.
Hololens is already teaming up with Nasa to help crew members at their International Space Station and developing an educational program called OnSight. The program will help scientists virtually explore Mars from the comfort of their offices. With a growing developer network, Hololens hopes to transform the way we learn, interact and collaborate in the future.
These 10 headsets are only scratching the surface of a growing market. With many implementations, from industrial to commerce and academic, they are all raising impressive rounds and addressing big markets. For a more in-depth tech analysis and spec comparisons, read through this guide.
Nevertheless, technological challenges are difficult to handle especially when production obstacles meet breakthrough technologies. For example, after a successful crowdfund of over $1M, CastAR postponed its shipment, refunded most of its backers and promised free dev kits by 2017.
It will definitely be interesting to see which are adopted as the go-to headsets for which functionalities.
10 startups to watch
With a little under 500 AR startups visible on Angelist, it seems that the space is already getting crowded. Still, some startups find interesting niches in the market. I took some time to look into interesting startups to watch that are still early and seem to have found a good market with a promising business model.
Augment (France)— b2b product visualization and purchase
After raising over $3M from Salesforce Ventures, Augment is integrating with the Salesforce mobile app to help vendors visualize product placement. Having a practical business model, Augment is already working with Coca Cola and L’Oreal among 200 clients. Augment also offers free licenses for professors and students, with thousands using the platform for free.
With a background in mechanical engineering, the Augment founder Jean-François Chianetta wants to lead the ARaaS space.
Ditto (SF) — 3D virtual try-on technology and ecommerce subscription for eyewear
With an eyewear subscription service, Ditto uses AR to enhance the shopping experience of their clients. With over 50k monthly unique website visitors, Ditto just raised their $5M Series A from notable investors such as August Capital.
Miralupa (Canada) — creating AR apps for commercial, gaming and entertainment
After going through the Microsoft Bizspark program and raising a small $93k seed round, Miralupa boasts an impressive portfolio, working with Jean Paul Gaultier, Oakley, Verizon, and the NBA, among others. Check out their impressive 2015 projects video below as an example of what they can make.
Sayduck (Finland) — b2b product visualisation and purchase
With $1,48M in funding, Sayduck is a b2b2c model allowing people to see home furnishings in their intended space before purchasing. Cutting the middleman, Sayduck works directly with furniture makers to present their products straight into people’s homes. They also work with furniture retailers as well as architects and designers to eliminate cumbersome steps in the purchasing process and help end customers visualize their purchases.
With over 51 clients , it seems that Sayduck is growing steadily, nevertheless the market is already competitive, as other firms launch their own apps or platforms. Ikea already launched its own in-house AR app in 2013, while Lowe’s launched its Holoroom in 2014.
Atheer (Mountain View) — Augmented Interactive Reality Computing
Atheer raised over $23M and acquired OnTheGo for its enterprise platform. Devices are announced to ship at the beginning of this year for a little under $4k. The company currently focuses on 3 markets: construction, healthcare, and logistics solutions for enterprise customers. Recently, Atheer added new board member Joe Kiani, founder and chairman of Masimo while new advisor Michael Patsalos-Fox has extensive experience from both his work as a chairman at McKinsey Americas and CEO of Stroz Friedberg. The company is currently focusing on go-to-market strategies and global customer deployment. At the end of last year, they also announced they are teaming up with remote collaboration software platform TeamViewer.
Customers and partners include Dassault Systemes, Flex, KPIT, Masimo, Optech4D, TeamViewer, Zurich Insurance Company, Lumus and NVIDIA.
Augmented Pixels (Palo Alto) — 3D mapping for mobile, robots and drones
Augmented Pixels raised over $1M from The Hive & Steltec Capital. Their business model extends from the usual AR offerings to integrating visual technologies with drones and robots. This b2b enterprise model can grow rapidly as more warehouses are automating logistics with the help of autonomous robots. Delivery, inspections and other commercial services are definitely up for innovation and Augmented Pixels could make a difference.
With a background in applied mathematics and software engineering, founder Vit Goncharuk is a serial entrepreneur with over 5 years of experience in software engineering.
Wikitude (Austria)— SDK that allows developers to build their own AR app
With over 80k monthy unique web visitors, Wikitude is a popular platform for developers entering the AR field. They have won several AR awards from Best AR Browser to Best AR Development Tool.
As this field is growing, offering AR solutions for new developers can definitely grow into a lucrative business model. The Wikitude ecosystem already boasts over 50k developers, over 10k apps and has customers in over 150 countries.
Investment rounds are not yet public, with 1 undisclosed round in 2010.
Paracosm (Florida)— technologies for mapping the 3D world
Paracosm offers an impressive cloud-based software that creates 3D models out of 2D imagery. They now focus on Architecture, Engineering and Construction, Mechanical, Engineering and Plumbing, as well as Geospatial solutions. Having already worked with Nasa, Google, Autodesk and Nvidia, among others, Paracosm raised $4,4 M in 2 rounds.
Aero Glass (San Diego)— Augmented Reality for aerial navigation
This AR application helps pilots navigate aircrafts in an easier fashion, allowing them to inspect the terrain, navigation, traffic, weather and other important information.
The leadership team has backgrounds in aerial navigation and geospatial software engineering. Aero Glass received a few research grants as well as small seed investments. It seems they are going in the right direction to be one of the first to implement head-worn displays in aviation.
Special mention - from a user’s perspective:
Theodolite — for those who love the great outdoors, this app is pretty impressive.
Pro features: Reference angle mode, nav calculator, data logging, e-mail export with KML, system clipboard integration, percent grade display, mil compass readout, optical rangefinders (survey, mil-based, sniper-style, and more), and colored lens filters to improve use in dark conditions and preserve night vision.
My conclusion: though promising, AR still has a long way to go
While these startups are capturing segments of big markets, AR still has a long way to go. People working on Google Glass already voiced their concerns, having already tried to commercialize the headset in 2013.
A few topics to consider would be the state of technology today, my belief is that AR still needs a few more iterations until it reaches a form that people are ready to use on a daily basis, that might take 5 - 10 years. Additional technologies still play a big part, such as virtual assistants. Viv is a fascinating project that I follow and believe will really help this field advance much faster. Nevertheless, investors are ready to bet on this potential and these early companies can grow to multi billion revenues. The question is — which ones will make it to the finish line?
I look forward to your thoughts on the subject! Feel free to reach out if you have any additional details or insights into the market, I’d love to hear from you!
Interesting articles on the subject:
AR Glasses: Best AR Glasses
Business Insider: What people who worked on Google Glass think of Hololens
CB Insights: AR/VR Applications