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Alternative Market Briefing

Virtual reality gets a reality check with a significant fall in investment

Monday, August 05, 2019

Laxman Pai, Opalesque Asia:

For several years, virtual reality (VR) start-ups were highly desired companies to invest in for future returns. More recently, though, the market has taken a volatile turn.

According to Preqin, from 2016 to 2017 the number of venture capital deals completed in VR-related companies dropped by 16%. This trend continued in 2018 with a 27% decrease in the number of investments compared with 2017.

"With H1 2019 recording a further 37% decrease in deals relative to the same period in 2018, it appears that investors are beginning to lose interest as the VR hype wanes," Preqin said in its Insights.

Over the past decade, North America and Asia together account for 79% of the total number of venture capital deals completed in the VR sector.

"Overall, from 2009 to H1 2019, the total value of VR deals in North America is 866% greater than for deals in Asia," said Diego Lanao, an analyst at Preqin.

Looking at 2019 thus far, North America constitutes 84% of the total amount invested in VR-related companies globally, having made the largest venture capital VR financing to date with a $1.25bn Series A/Round 1 investment in Epic Games, Inc. in October 2018.

Amount of capital invested can be misleading

Looking at the two dominant regions investing in the VR market, Asia has begun to creep up on North America in terms of the number of venture capital deals completed per year.

In 2016, Asia recor......................

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