Venture capital poured in to the virtual and augmented reality sectors in 2016 to the tune of $1.8bn, according to research firm Greenlight Insights. Its report claims that the number of such deals increased by 30%, while the average deal size grew by 58%.
More than 85% of the deals were seed or Series A rounds, representing the relative youth of the market. Overall, 72 VR and AR companies raised more than $2m in 2016, although it’s important to realise that AR firm Magic Leap’s $793.5m Series C round in February 2016 is a big chunk – 44% – of the overall total.
“In 2016, the increase in deal volume and median deals size illustrate a rapidly evolving landscape for VR technology,” said CEO Clifton Dawson, although his company is warning that VR and AR “may not yet be mainstream enough for most investors”, with the sector only accounting for 1% of total venture funding.
For more on VR funding in particular, see our interview with Seedcamp’s Dave Haynes from earlier this week.
“Being early is sometimes as good as being wrong, and in 2016 a lot of investment dollars went in to VR,” he told us. “You can feel the pressure mounting inside firms who have invested in the sector, while analysts wait for consumer demand to catch up with the hype.”
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