In the world of AR/VR, China Corporate Ventures lead

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When Facebook paid USD2 billion to acquire Oculus, it marked the time that AR/VR started to climb its crescendo pitch in the west.  In China in January 2016, Mojing, a local VR startup raised USD 34.4 million in series B, valued at USD 214 million, becoming the highest among all other China VR startups. No doubt, AR/VR is taking the centre stage globally. And according to GoldmanSachs, the venture capital investment made in the last two years on VR/AR already hit USD 3.5 billion.

An easy way to differentiate between AR and VR is: VR immerses a user in an imagined or replicated world which disconnects from the reality while AR allows users to see the real world and overlay digital imaginary and information onto it. It seems to be a relative success of VR versus AR so far, given VR’s strong technology progress and momentum. Most video game development is in VR right now and will more likely to gain substantial traction soon.

Looking beyond video games, real estate, retail and health care are those first markets that AR/VR might disrupt the status quo. For instance, Sotheby’s began to show luxury home in VR; many brands hope to leverage AR/VR to reduce the need of in-store display inventory or consumer viewing experience can be deployed in home via mobile phone; doctors are experimenting with AR as a hands-free medical tool.

In China, based on local research findings, corporate ventures from internet giants or media production companies such as Baidu, Alibaba, Tencent, Letv, have shown their voracious appetite in AR/VR investment, often leading the A round or B round. Because they have more capital to burn, can leverage their large user base to distribute the product; or even fancy a potential acquisition in the near future to enhance their existing product line and business scope, should the investment in certain AR/VR startups end up in fruitful outcome. In comparison local VC/PE in general appear cautious in dealing with investment in this arena; tend to focusing on angel funding or acting more like a follower after seeding stage, as fearful of the immaturity of the profitable model of AR/VR in the short run in China.

Nevertheless user experience, technology constraints and development of content&application remain as the major hurdle, at this stage, for AR/VR to overcome for quick expansion and pervasiveness in the market. In particular user experience and content development should be the most important factors. Consumers and enterprises are often hesitant to buy AR/VR without a strong supply of content.

Local experts already saw rising stars in VR hardware in China. This means in the next several years, AR/VR hardware in China will probably be dominated by few big players, for instance Mojing, Deepoon. Therefore the blue ocean for new startup entry should lie in the content development area.

Cecilia Wu

A witty, nutty and frosty writer who hopes to jot down moments of inspiration from her daily life

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