“New Decade, New Horizons” Can Augmented Reality be one of the coming waves of the Late Stage/Growth VC market ?
This is the first article of our series “New Decade, New Horizons”, which will focus on growing business horizons that might be at the hearth of the coming Late Stage / Growth Investment waves of the 2021/2030 decade.
In this article, we’ll go through an innovation field that most of us have already heard of, but few of us can precisely describe. I’m talking of Augmented Reality.
Is Augmented Reality (AR) similar to Virtual Reality (VR)?
Not Exactly! Since Virtual Reality takes us to a 100% virtual world, when Augmented Reality brings digital content to our real-life environment. In a nutshell (and if you are a movie fan), VR is pretty much what you see in Ready Player One…
…when AR (our topic today) is much closer to Minority Report…
That being said, is AR more than a gadget ?
Actually yes, because we now live in a world of data (their number have been multiplied by 25 since 2010 !) and their format evolves continuously. More and more companies use these data to make us buy more of their products or services, but how about us workers and citizens? We could benefit from them as well, to live much easier days at home, at work, or in the street!
We could walk or drive a car, without having to look at our smartphone to get directions; we could build a furniture kit or cook in our kitchen without having to look at the manual or the recipe book; we could save time at work by having a digital assistant for our complex tasks.
Some of us might think that we don’t need all this, that it is unnecessary help for lazy human beings… Fair enough! But think that all these services are already offered by our smartphones, this same smartphone that we keep watching more than 2 hours a day, and that we turn-on hundreds of times a day… Would we be ready to go back in a past with no help from our smartphone? Some of us maybe. But how about the others? Would they prefer having the right info at the right time in front of their eye or would they prefer keeping using and touching their good old smartphone? We should all start asking ourselves the question.
That being said, are we still talking of Science-Fiction here?
No more! AR is no Sci-Fi anymore.
So, why do we think so?
First, because AR has been hard to imagine: thinking AR in the recent years was pretty much like thinking Internet in 1995 (the digital world of tomorrow) as well as the Smartphone in 2000 (the right tool to interact with this new world). Not an easy task…
Besides, AR was not only hard to imagine, it was also hard to implement, because it is at the crossroads of many technologies (Real-time 3D, Human-Machine Interface, iOT, Computer Vision, or 5G…).
Still, AR has overcome most of these challenges and is now a fast-growing market with nearly 10Bn€ worldwide in 2020 and an expected 30Bn€ in 2023.
In this growing market, GAFAM and the major smartphone players have been running a hard and expensive race to hardware…
…And yes, you might have heard of the Google Glass Project, back in 2014, which was not a commercial success, but that was also a brand diferent era! Things have drastically changed in 7 years and we’ve identified two recent events that could be remembered as T0 for AR, by technology historians:
- The first one could be the launch of the Hololens Glasses by Microsoft in 2017 (second version in 2019) that now makes Microsoft the Hardware leader on the B2B AR market and contributed to evangelize the Corporate market.
- The second one could be the launch of AR kit by Apple in 2017 and AR Core by Google in 2018, two Software Development Kit (SDK) allowing to build AR applications much faster and simpler than before.
Finally, the coordination since 2017 of a large-scale AR Hardware Device by Microsoft, and two SDK by Apple and Google, much probably constitutes the Big-Bang time of an AR era.
If AR is not a Sci-Fi thing anymore, does that make it a real business thing yet?
Of course! And that’s the T1 of AR after its recent Big-Bang.
Haven’t we all heard of games like Pokemon Go or fun tools like social network picture filters? This kind of large-scale applications now work perfectly well, but AR is also going way beyond that and addresses every field of our economy:
- In Museums, we see up to +15% of additional visitors when they offer AR experience;
- In Retail, up to +30% of additional sales when one can try its product trough AR (clothes, furniture…);
- In Factories, up to +40% of additional productivity on certain tasks;
- In the Construction Sector, up to 50% of defect reduction;
- In Surgery, up to 3X less time to set up complex interventions…
And these are not laboratory tests! We are talking here of “real world” tests, with measurable results, Key Performance Indicators (KPIs) and Return on Investment (ROI). AR works and its proven. It makes Corporate lives easier and helps their businesses.
So why don’t we see AR everywhere around us?
Because in the B2B market, scaling from a Proof of Concept phase to a large-scale implementation is still not an easy thing, slowed by a few challenges to unlock: hardware prices, hardware robustness (especially for industry), UX, Team training budget, Health and ethics enquiries, 5G deployment etc.…
And in the B2C market, we keep waiting for (i) new AR devices targeting consumers more than Corporates, and that might come from smartphone players such as Apple and Samsung, or social media leaders such as Facebook (which recently announced its first AR hardware for Q4 2021), and (ii) the first “killer” apps that would make us switch - for certain tasks at least - from using our Smartphone to using an new generation AR Device.
Between these two markets, there might be a B2B2C silver lining with startups offering services to museums, schools, stadiums or theme parks, and that could contribute to evangelize AR Devices to consumers as a first step to the path of mass commercialization.
Finally, why would AR be part of the coming Growth Investment wave ?
Because the AR market is already there. It is already large and is only getting ready for its BIG moment.
Corporate are learning fast, and work with Microsoft and other AR device producers to develop new generations of hardware which will perfectly fit their needs. Once this is unlocked, business opportunities will be unlimited.
On the B2C market, we should benefit from the B2B2C raising applications and we might enter a new world as soon a cool device is launched by a GAFAM.
France can probably not lead the Hardware race, but it can help it. How ? Thanks to its software, computer vision or optical R&D and labs. Also, being at the crossroads of software excellency and 3D/creation, can help us build a powerful value chain and carry great ambitions for the future of AR in the country.
At Bpifrance, we’ve already financed nearly 100 AR projects in their R&D phases, and made 2 equity investments (Gabsee, Eyelights) through our early stage investment fund. Also, lately we’ve seen AR startups raising Series A in France (inc. Minsar 3m€ or Diota 7m€ in 2019) and a small number (but encouraging number!) of big rounds in Europe: WayRay (CH, 80m€ en 2018), Envisics (UK, 50m€ en 2019), Scandit (CH, 80m€ en 2020), Varjo (FIN, 47m€)…
At this stage, I hope I got to convince you: AR is no Sci-Fi anymore. And thinking that some of the future “mega-rounds” of the coming decade will be built on AR, is probably not a Sci-Fi scenario either. Let’s talk about it together and get ready for the wave.
Damien Launoy
Bpifrance Tech Investor @Bpifrance Large Venture
Augmented Reality Expert @Bpifrance
