Mainstream venture capitalists pumped up startups in virtual and augmented reality in the third quarter, with a record $2.3 billion invested in the last 12 months, according to tech advisor Digi-Capital .
Tim Merel, managing director of Digi-Capital, said that half a billion dollars was invested in AR/VR startups in the third quarter. That was the ninth consecutive quarter of increased investment in the hot sector, which Digi-Capital estimates could be a $120 billion business by 2020.
While angels and smaller VCs led the early rounds of investment, AR/VR is now being driven by major Sand Hill Road VCs and corporate investors. Mainstream VCs accounted for 65 percent of dollars invested in the quarter, while corporate investors made up 21 percent.
Above: Digi-Capital says 65% of AR/VR investors are mainstream VCs. Image Credit: Digi-Capital
The average investment was $9.3 million, or $16.4 million excluding seed deals, during the quarter.
“AR/VR investment is rapidly going mainstream,” said Tim Merel, managing director of Digi-Capital and CEO of Eyetouch Reality, in an email.
The big-name financial investors included Fidelity, Intel Capital, Softbank, Kleiner Perkins Caufield and Byers, Sequoia, DCM, Qualcomm Ventures, Raine, CITIC, and more. The roster of corporate investors joining the fun added Amazon, Alibaba and News Corp., Merel said. So while specialist AR/VR VCs drove the early investment market, growing confidence and check sizes have led to an acceleration in the number of mainstream investors, he said.
Excluding Magic Leap’s massive rounds in 2014 and at the start of this year, the overall growth trend for AR/VR investment has now been on an upwards trajectory for over two years, Merel said.