Risky Business
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Risky Business

Next UP: “Alternate Realities”

How investors are currently thinking about virtual reality, augmented reality, and mixed reality

  1. Augmented reality — a live, direct view of a physical, real-world environment with an overlay of computer generated video, graphics, audio, or GPS data
  2. Mixed reality — a live, direct view of a physical environment with an overlay of computer generated video, graphics, audio, or GPS data that are anchored to points in the real world

Investor Perspective

The story of VC investor interest in the virtual reality market is pretty straightforward. While the underlying technology has been around for quite some time, in 2014 Facebook bought Oculus for $2 billion, and suddenly VCs and entrepreneurs began paying serious attention. While many investors professed that augmented reality might hold the potential for greater adoption, the first wave of investment in this market went predominantly into hardware, content, and enabling technologies for virtual reality.

Notable M&A outcomes: while the 2014 Oculus sale to Facebook set the table for massive investor interest in virtual reality, there haven’t been any exits at that level since
According to estimates by The Verge, market penetration hasn’t reached consumer scale yet
VC funding to “alternate reality” startups has continued to rise in volume and deal value
Four companies raised more than half the capital to “XR” startups in 2017
The four “XR unicorns” that raised mega rounds of greater than $100M in 2017, according to TechCrunch
Pokémon Go from Niantic Labs

Venture Capital Investor Panel

I asked our panelists whether they really care about the nuances distinguishing VR, AR, and mixed reality. Teymour Boutros-Ghali, managing partner of Bold Capital was quick to say, “No. I don’t care,” focusing instead on what conditions could drive revenue for his investments in the category. Teymour noted that location-based entertainment (“LBE”) like theme parks and arcades provide a logical thesis for XR investing, since these don’t rely on massive consumer adoption. He mentioned high profile LBE entrants like The Void, Two Bit Circus, and his own fund’s investment in Dreamscape.

Our panelists represented a diverse approach to investing, ranging from a new fund dedicated to gender balance, a traditional institutional venture fund, a private equity fund, and one of the largest corporate VCs
Our panel of investor experts in “alternate realities”
Enterprise virtual reality and augmented reality solutions in these industries may be adopted widely before consumer VR becomes mainstream

Seeking awards now,

The money well will run dry —

Jobs may vaporize.

If anyone has additional ideas for haiku on this topic, please post them below in the comments! I will tweet out the best entries.

“Bey’s Law” and What I learned in Other Sessions

Mike Dunn, the president of product strategy and consumer business at 20th Century Fox, and the chair of DEG, opened the forum by encouraging the members of the group to work together with the startup community to continue to develop innovations that benefit the entire industry, even through uncertainty and disruption.

  • “Head-mounted displays are still a few years away” — Charlie Fink, author of “Metaverse, An AR Enabled Guide to VR & AR”
  • “The challenge is not the tech; it’s the application” —Mike Dunn, 20th Century Fox
  • “If Beyonce would release her next single in VR, the hardware adoption problem would be over” — Christina Heller, VR Playhouse
Charlie Fink wrote an augmented reality enabled “pop up” book to explain XR technologies, but I still think the next edition would be more immersive if he were to add “scratch and sniff” technology, too

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Scott Lenet

Founder of Touchdown Ventures & DFJ Frontier, USC & UCLA adjunct professor, father of twins, Philly sports Phan, Forbes & TechCrunch contributor