CB Insights: Funding for virtual reality startups grew 347%

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Funding for space-related companies doubled in 2015, including VR and AR, drone startups, and others. This year, VR and AR startups continue to lead in both deal and dollar volume.

In 2015, cutting-edge technology startups, including augmented reality and virtual reality, aviation, and drones, received $3.5 billion in investment, with 254 investment transactions.

Data from CB Insights shows that space startups dominated the few $100 million-plus investment events in 2015, while virtual reality and augmented reality dominated investment activity and dollars in the first quarter of 2016.

Annual Trends

Space investment drove cutting-edge tech investment in 2015. Space and VR/AR investment were on par in 2012. However, space investment has grown rapidly in recent years. In 2015, investment in space startups increased by 253% over the previous year, and investment in VR/AR and drone startups doubled.

The three largest investment deals in the frontier technology sector in 2015 were SpaceX's $1 billion Series D investment, OneWeb's $500 million investment, and O3B Networks' $460 million Series H investment.

Investment in all frontier technology categories has been growing steadily since 2012, with virtual reality and augmented reality seeing the fastest growth. In 2015, investment transactions in virtual reality and augmented reality increased by 122% over the previous year, making it the fastest growing of the three frontier technology industries.

In 2014, drone investment deals surpassed space, and in 2015 deal volume grew 80% (74 deals).

However, space investment drove the growth of frontier tech investment in 2015, even though the number of deals was relatively small. There were 44 investment deals in the space sector in 2015, an increase of 63% over the previous year.

Quarterly Investment Trends

In terms of quarterly investment trends, investment in cutting-edge technology has shown a downward trend since mid-2015. In the third quarter of 2015, investment in cutting-edge technology fell 58% from the previous quarter.

This trend continued in the fourth quarter of 2015 and the first quarter of 2016. Thanks to Magic Leap's $793 million Series C investment, virtual reality and augmented reality investment reached a new high in the first quarter of 2016, an increase of 45% from the previous quarter.

Investment activity also began to decline in mid-2015. Frontier tech deal activity fell 19% in the second quarter of 2015, but has since rebounded.

Over the past three quarters, there have been more VR and AR investment deals than space and drones combined. However, VR and AR deal activity fell to 42 in the first quarter of 2016, down 9% from the previous quarter.

Investment deals in the drone sector remained relatively flat, with 19 deals in the second quarter of 2015 and only 23 deals in the first quarter of 2016.

Interestingly, space investment deal activity has declined significantly, with only seven deals in the first quarter of 2016, compared to 13 and 12 in the first and second quarters of 2015, respectively.

199IT.com Originally compiled from: CB Insights. Please do not reprint without authorization