Virtual reality gets its groove back

Man on Color ink illuminating with black light,Using a virtual reality headset

Technophiles tend to overestimate the pace of mass adoption. For example, virtual reality fans expected a lot more of us to be whiling away our days with goggles stuck to faces, immersed in virtual worlds.

Instead, we’re still glued to our cell phones, as VR headset makers struggle to make headway. While consumers snapped up more than 200 million iPhones last year, they bought just a few million headsets. For 2017, those ratios aren’t expected to improve much.

Yet while virtual and augmented reality uptake may be slower than boosters expected or hoped, venture investment hasn’t slackened. Funding for VR and AR startups in 2017 is roughly on par with 2016 levels, a Crunchbase News analysis finds. The year got off to a sluggish start in the first quarter, but investment in the past three quarters has accelerated enough to make up for the deficit.

Investors showed their optimism this week with a $200 million round for Niantic, whose Pokémon GO augmented reality game is the best-known hit for the medium. (Its popularity was no doubt buoyed by the fact that it can be played on a regular smartphone.) Niantic’s mega-round comes as the company prepares to release a new game based on the Harry Potter series.

In total, at least 217 companies in the AR and VR space have raised funding rounds this year, bringing in $2.1 billion, according to Crunchbase data. Of that, more than $900 million went to two companies: Magic Leap and Unity Technologies.

VR and AR over the years

In the chart below, we look at annual investment venture totals for virtual and augmented reality startups, including seed through growth stage.

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