Venture

A Timeline Of Investor Interest In AR Startup Magic Leap, Which Has Raised $2.3B

Nearly seven years after its founding and a hefty $2.3 billion in reported VC funds, Magic Leap, the augmented reality headset developer that operated largely in stealth mode, has released the “Magic Leap One,” available for those who join a waitlist and pay $2,295 for the device.

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The ability of its product to match carefully released demos has been called into question. This weekend, Palmer Luckey, a co-founder Oculus, called the Magic Leap One a “tragic heap” in a rather scathing blog review of the startup’s first device.

Crunchbase News doesn’t have a review unit, so we can’t corroborate Luckey’s claims. However, more negative, high-profile reviews could impact the ability for other augmented reality startups to raise in the future. Of the nearly $6.3 billion that augmented reality startups have raised over time, Magic Leap accounts for 37 percent of the total, according to Crunchbase.

Here’s how that money was dispersed over the past four years.

February 5, 2014: $50M Series A

Since the beginning, Magic Leap has been able to attract significant sums. In 2014, the average Series A, according to Crunchbase data, was $7.1 million. Magic Leap attracted 7x that amount.

At the time, coverage of the startup was limited. No investors were disclosed by Crunchbase or other sources. However, Magic Leap did disclose its intentions to commercialize a “proprietary human computing interface technology,” according to FinSMEs.

It wasn’t long, however, until the company struck gold.

October 21, 2014: $542M Series B

Eight months after its comparatively significant Series A raise, Magic Leap went on to raise over half a billion dollars. It was the largest deal announced in 2014, beating out Snap’s $485 million Series D, Airbnb’s $475 million Series D, and Dropbox’s $350 million Series C. The deal also made Magic Leap a unicorn valued at $2 billion, the amount Facebook acquired virtual reality startup Oculus for nearly a year before.

Aside from the raise, Magic Leap attracted a roster of high-profile investors. Google led the round, and, according to Crunchbase, Kleiner Perkins, Andreessen Horowitz, and Qualcomm Ventures were among the big names that also participated.

While there were some demo videos of the product on Magic Leap’s website, a Gartner analyst told the New York Times, “Until we see the device, you have to be a little skeptical.”

February 2, 2016: $793.5M Series C

For sixteen months, Magic Leap kept the VC spigot turned off. But once it hit the well, money came out in a big way. The still-stealth AR shop out-raised its last two rounds by $201.5 million, pushing Magic Leap’s valuation to $4.5 billion, post-money. 

According to Crunchbase, it was the largest Series C raised in 2016. Uber’s $3 billion Series G, Uber China’s $2 billion Series B, and Snap’s $1.8 billion Series F all outshined Magic Leap. However, for a company with no product, it was still an unprecedented amount to raise.

Google maintained its investment in the AR startup. Meanwhile, Alibaba, China’s e-commerce giant, made its first debut in Magic Leap’s roster of investors. Rony Abovitz, the CEO and founder of Magic Leap, told TechCrunch it was excited “to help introduce Magic Leap’s breakthrough products to the over 400 million people on Alibaba’s platform.”

However, calls for more clarity about what Magic Leap actually is were increasing. The Verge asked the question in five different ways after a Wired profile of the company failed to clarify just what, exactly, the AR startup was attempting to accomplish.

October 12, 2017: $502M Series D (I)

For the first time in Magic Leap’s history of raising rounds, its first tranche of Series D funding fell below its 2014 Series B and 2016 Series C and didn’t set any notable records for the year.

Prior investors Google and Alibaba participated in the round. Meanwhile, Singapore-based Temasek Holdings joined the fray.

The round was also one of the first times details about the product were disclosed. At the time, Bloomberg reported the headset would “cost between $1,500 and $2,000” and “require users to carry a puck-shaped device, around the size of a smartphone, that would wirelessly provide processing and information to the glasses.” But more than just high-level details of its product leaked.

According to The Verge, Magic Leap was accused by former Marketing Head Tannen Campbell of misogyny in the workplace. But those complaints didn’t seem to turn off investors.

March 7, 2018: $461M Series D (II)

A number of large rounds have been raised this year, and given Magic Leap’s funding history, it’s not shocking that it managed to pull another tranche of funding in the hundreds of millions.

The round introduced two new investors: Saudi Arabia’s Public Investment Fund and the investment arm of Axel Springer, a European-based digital media company. Four months later, the company released its first concrete demos of what its headset was capable of doing.

However, its developer preview was a far cry from the incredible whale preview video the company released in 2016:

Looking Forward

With a total of $2.3 billion, Magic Leap has gulped a ton of VC money for a product that stayed stealth for years. And now that it is has something like a commercial product, few signs point to Magic Leap really delivering on its hype.

For startups and entrepreneurs in the AR and VR sector, this could be a huge blow. If Magic Leap can’t attain some form of commercial success with Google and Alibaba as backers, VCs aren’t likely to rush to fund other startups in the sector. For the number of seed- and early-stage startups in AR and VR with more realistic expectations, that’s a lot of potential gunpowder wasted.