Here is our Q1 2019 summary report on the virtual reality startup sector. The following report includes a sector overview and recent activity.
The virtual reality (VR) industry has seen 1082 investors and $11.4B total all time funding. Let’s analyze which VR categories have the most number of investors actively financing the startups. The graphic below highlights VR categories based on the number of investors in each category.
As the graphic demonstrates, Augmented Reality has the highest number of investors at 346, with Environment Content right behind at 320. Augmented Reality companies superimpose a computer-generated environment on the real world. Environment Content companies create or present computer-generated spatial simulations for the user to experience. In addition, the average number of investors across all virtual reality categories is 163.
We’ve previously inspected virtual reality (VR) funding trends and observed that its funding in the first half of 2018 was down versus the last two years. Now we are performing a deeper examination on our VR research platform to compare funding by category. Our analysis reveals two key takeaways:
- The VR Enabling Software category leads the sector in Q2 funding
- The Augmented Reality category leads the sector in all-time funding
We’ll highlight these takeaways with some graphics and discussions below.
The VR Enabling Software Category Leads Virtual Reality In Q2 Funding
To start off, let’s review the amount of funding raised this quarter by each category within VR.
The above graphic shows that the VR Enabling Software category leads the sector in Q2 funding with $59M. Its funding is 1.4 times the funding of the next two categories, Augmented Reality and VR Consumption Hardware at $41M each.
VR Enabling Software companies produce software to facilitate the development or functioning of VR products. Examples include VR media player software, video processing platforms, and VR development toolkits. Some example companies in this category include Neurable, Nomadic, Nurulize, and Visbit.
Let’s now investigate how these categories’ funding compare with each other historically.
The Augmented Reality Category Leads the Sector in All-Time Funding
The graph below shows the all-time funding for different VR categories. The Q2 funding and growth rates of these categories are also highlighted.
The bar graph indicates that the Augmented Reality category leads the sector in total funding at $3.5B. This is 1.7 times the funding of the next category, VR Consumption Hardware at $2B.
Augmented Reality companies superimpose a computer-generated environment on the real world. Their products include AR headsets, AR social games, and AR surgery simulations. Some example companies in this category are Lumus, WayRay, Meta, and Blue Vision Labs.
The VR Enabling Software category leads virtual reality in Q2 funding. In addition, the Augmented Reality category leads the sector in all-time funding.
The virtual reality (VR) sector has seen a lot of buzz in the news lately. Its applications can be observed in all industries from health to entertainment to real estate. In addition, we’ve analyzed that its funding and exit momentum has experienced significant growth in recent years.
We will now take a closer look at the different components of the VR sector and how they make up this startup ecosystem. We have classified the companies into 13 categories. This blog post will illustrate what these categories are and which categories have the most companies. We will also compare the categories with one another in terms of their funding and maturity.
Virtual Environment Content Is the Largest VR Category
Let’s start off by looking at the Sector Map for the VR sector. We have classified 750 virtual reality startups into 13 categories that have raised $10 billion. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.
We see that Virtual Environment Content is the largest category with 286 companies. These companies create or present computer-generated spatial simulations for the user to experience. Such environments include virtual reality video games, learning platforms, and socializing platforms. Some example companies are VRstudios, Survios, VREAL, and Reality Reflection.
We have seen what the different categories making up this sector are and the number of companies in each. What about their funding and maturity in relation to one another? Let’s look at our Innovation Quadrant to find out.
The Pioneers Quadrant Has the Most Virtual Reality Categories
Our Innovation Quadrant divides the VR categories into four different quadrants.
We see that the Pioneers quadrant has the most virtual reality categories with 5. The Pioneer categories are in the earlier stages of funding and maturity. The Established quadrant has four categories that have reached maturity with less financing. The Heavyweights quadrant also contains four categories. These categories have reached maturity with significant financing.
We’ve analyzed the virtual reality categories and their relative stages of innovation. Let’s now look at how they stack up against one another in terms of their total funding versus company counts.
Augmented Reality Startups Have the Most Funding
The graph below shows the total amount of venture funding and company count in each category.
As the above graphic implies, the Augmented Reality category leads in funding with $3.5 billion. Its funding is almost 171% of the funding of the next category, Virtual Reality Consumption Hardware. Most notably, about 74% of Augmented Reality funding ($2.6 billion) comes from two companies: Magic Leap and Niantic.
Augmented Reality companies create products that superimpose a computer-generated environment on a user’s view of the real world. Their products include augmented reality headsets, augmented reality social games, and augmented reality surgery simulations. Some example companies in this category are Lumus, WayRay, Meta, and Blue Vision Labs.
Conclusion: Virtual Environment Content and Augmented Reality Lead the Sector
The analysis above highlights that the Virtual Environment Content category leads the sector in total companies, and the Augmented Reality category leads in total funding. It’ll be interesting to see how the virtual reality landscape will change and develop throughout the rest of 2018.
Here is our Q1 2018 summary report on the virtual reality startup sector. The following report includes an overview, recent activity, and a category deep dive.