The metaverse is dead. Long live the metaverse.
However, last week’s unveiling of the new Apple Vision Pro — with a price tag of just $3,500! — put a spotlight back on the space, highlighting what it could be and what its future may hold.
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The present isn’t great for the startups in the space, as venture dollars in the sector have plummeted since Mark Zuckerberg’s big name change announcement in late 2021.
Funding to startups in the metaverse space — defined here as companies in virtual reality, augmented reality and the virtual world industries — has dropped 77% from the the final quarter of 2021 to the first quarter of this year, per Crunchbase data.
The current quarter doesn’t seem to promise anything better.
Now, it is important to remember that in late 2021 — a year in which all venture funding records were smashed — was a very different time in the funding world than the current environment. The venture market has seen a significant downturn since then and shows few signs of returning.
Nevertheless, not only have dollar amounts decreased — from $2.2 billion invested in Q4 2021 to only $526 million last quarter, per Crunchbase — but so has deal flow. More than 160 deals were announced in the final quarter of 2021, while last quarter saw fewer than 100.
However, this year has seen no such rounds. The largest deal is on the periphery of the space — New York-based AI-powered car buying platform Impel landed a $104 million round in January. The startup does use AR features to make the car-buying experience more personalized, but that does seem on the fringe of what most people define as the metaverse.
The next largest round was a $70 million Series B for Orlando, Florida-based Red 6 this month. The startup is an augmented reality company that works with the United States Air Force to train fighter pilots.
Despite that round, the current quarter — with only weeks left — has seen only $284 million invested in startups involved in the metaverse in a meager 46 deals.
Even the slight uptick in funding in the final quarter of last year is really an illusion. The $1.9 billion number is mainly because of the $1.5 billion Series E defense and security firm Anduril picked up. The Costa Mesa, California-based startup includes AR/VR technology in its software and hardware for the military and defense industry.
Of course, the adoption of the metaverse hasn’t just taken hits from VC investors.
Earlier this year, Microsoft said it would shut down AltspaceVR, the social virtual reality platform it acquired in 2017. It was later reported the company also dismantled a team it formed four months ago to help customers use the metaverse in industrial settings.
Even Meta itself has seemed more interested in tech’s latest shiny toy — artificial intelligence — than talking about the metaverse.
The Apple effect
However, Apple’s unveiling of its Vision Pro has renewed talk of the concept — and perhaps for good reason.
Unlike Meta, Apple has a long track record of unveiling some of the tech industry’s most successful and game-changing devices. The Cupertino, California-based giant has been able to take vague concepts and ideas and distill them into a device — or devices — that are easy to use and can even be status symbols.
Apple even doubled down on its AR/VR bets last week, buying Los Angeles-based Mira, an AR startup that makes lightweight headsets for industrial companies and the U.S. military, for an undisclosed amount.
While many have buried the metaverse, it’s important to remember that ideas like the metaverse (or Web3) can’t be built in a quarter. The infrastructure alone needed for such platforms takes years to create. In that amount of time, there will be plenty of ebbs and flows in the marketplace.
All of this isn’t to say the metaverse has been completely resuscitated. No one can be sure of Apple’s full plans for its latest device. The company also does not have the best record of working nicely with external developers — something that will be needed for the metaverse to happen.
However, there is a reason Apple has a nearly $2.9 trillion market cap — almost triple that of the tech market’s latest darling, Nvidia, which is riding high on the coattails of the AI frenzy. If there is a company that can bring the metaverse to (virtual) life, it could be the maker of the Mac.
Illustration: Dom Guzman
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