Funding ecosystem emerges for virtual reality startups

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Virtual reality (VR) is disrupting existing industries and might even create new ones. Already companies like Next VR are changing the entertainment business, getting the public used to attending music concerts and sporting events in virtual reality. To foster early stage startups working on new and as yet unthought-of of applications for virtual reality technology, a number of venture capital firms are establishing accelerators, the most active amongst these being Rothenberg Ventures and BoostVC.

Startups working in the fields of virtual reality tourism, digital game subscription services, VR content development, 3D-360 cameras, and VR platforms for fine art and training for health care professionals and manufacturing are amongst fifteen companies accepted into Boost VC, a startup accelerator based in San Mateo California. The accelerator has now invested in 34 VR startups.

Boost VC is a specialized seed-stage accelerator that invests in blockchain and virtual reality startups. Blockchain is an online ledger and blockchain technology is used to verify transactions within digital currencies. The latest intake of twenty companies include five blockchain ventures. The accelerator invests in around 25 startups twice a year and, in addition to guidance, offers housing and office space during the three-month accelerator program.

Boost VC is one of a number of venture capital firms that are making VR an investment pillar in their portfolio. In September 2015 Rothenberg Ventures, which provides early-stage funding, announced its intention to invest $10 million over a 14 month period in companies developing VR technologies. The firm’s River Accelerator specializes in seed stage VR and AR startups.

According to CB Insights Rothenberg Ventures and BoostVC are the most active VR investors followed by GV (Google Ventures) and Intel Capital. GV invests in companies across a broad range of industries, including VR. GV has invested in AltspaceVR, Jaunt, and Emergent amongst others, and Intel Capital has invested in Total Immersion and WorldViz among others.

Techstars, a leading startup-accelerator program, has also invested in seven VR companies, including Fish Bowl VR, Iris VR, Occipital and Skully.

In Japan where interest in virtual reality runs high, Colopl, a Tokyo-based gaming company for mobile phones, launched a $50 million fund to help developers working with the technology in December 2015. The fund is managed by Colopl Next, the company’s venture arm. The fund will invest in VR software and hardware including VR headsets, distribution platforms, and input devices.

In the meantime, Japanese mobile publisher Gumi, announced this week that it will invest in The VR Fund, a San Francisco-based VC Fund founded by PlayFirst CEO Marco DeMiroz last month. At the time VR Fund was looking to raise $80 million to grow the Virtual Reality industry in the West. Gumi didn’t disclose the investment amount.

Gumi has also invested in a VR startup in Tokyo. Tokyo's VR Startups group has founded an incubation programme for local developers, providing seed funding, working space and back office support for qualifying studios. Headed up by the CEO of Gumi Inc, Hironao Kunimitsu, the fund aims to bring the city's most innovative and talented VR developers together to accelerate local projects.