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AR/VR volumes, valuations and fundraising maturing, says Hampleton Partners

Hampleton Partners’ latest analysis of the Augmented Reality (AR) and Virtual Reality (VR) M&A global market reveals that this nascent sector is already showing signs of maturity, with later-stage funding, valuations and transaction volumes on the up and gaining momentum.

M&A transaction volumes increased from a total of only 11 in 2014 to a total of 26 in 2018. North America is poised to establish a leading position in AR/VR M&A, as it is home to 62 per cent of all targets and to 60 per cent of buyers involved in an M&A transaction.

Meanwhile, later-stage funding for AR/VR is also on the rise, especially for Series B, C and onwards. In fact, total combined funding for all nineteen Series C+ rounds reached EUR2.2 billion in 2018 – more than ten times the EUR0.2 billion raised across the eight rounds completed in 2015.

2017 saw the biM&A transaction vggest spike in Series B funding – the result of three unusually large “supergiant” B rounds exceeding EUR100 million. Most notably, London-based Improbable Worlds received EUR463 million from Softbank’s Vision Fund at a total valuation of around EUR1 billion – the largest series B round of the year.

The average disclosed ticket size has grown across series C+ funding rounds, but also across all series types, reaching EUR15.4 million in 2018, vs EUR10.1 million in 2016 and EUR5.4 million in 2013.  

Heiko Garrelfs, sector principal, Hampleton Partners, says: “While the M&A market for AR/VR targets is still in its infancy compared to other technology sectors, thriving investment in later-stage companies indicates that the industry is gradually maturing.  Big ticket funding is helping startups grow beyond proof of concept stage and develop a real customer base, which will help attract potential acquirers.

“Early AR/VR adopters in healthcare, e-commerce and cosmetics are helping these technologies become more mainstream and proving their worth. As a result of all these factors, we anticipate an uptick in M&A transaction volume in the near future.”

Whilst tech giants rank among the most prolific acquirers in this space, healthcare, e-commerce and cosmetics companies are integrating ground-breaking AR and VR technologies into their workplaces and customer offerings, to help solve some of their most complex challenges.

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