Digi-Capital tracked startups raising over $6 billion across AR/VR in 2018, driven by deals in China. A decline in deal volume during the first three quarters of the year stabilized in Q4, while deal value returned to a two-year average after large spikes from a few mega-deals in China.
There has been a decline in AR/VR deal volumes in the last two years, with the most recent high well over 100 deals in Q4 2017.
The largest number of AR/VR deals by category in 2018 were in core tech, games, enterprise and smartglasses. The general market trend last year guided investors towards the crossover between computer vision and AR. There were also some VR investments such as Varjo raising $31 million and Pico Interactive $24.7 million.
The scale of deals in the Chinese market has been particularly impressive over the last 12 months.Although over $1.1 billion was invested globally across all stages in Q4 2018, the bulk of that was again in later stage series C+ deals. Removing those outliers to focus on accelerator through series B, the market stabilized to over $300 million invested.
By far the largest investment category by value was particularly Chinese companies crossing over between computer vision and AR. There was also significant investment with Chinese companies in AR advertising, lifestyle and smartglasses categories completing $100 million plus deals.
What next in 2019?
Q4 2018 returned to more normal historic levels of deal flow and dollars invested globally, but the first two quarters of the year could set the tone for AR/VR investment to come.