The metaverse is experiencing a transformative phase that has reinvigorated its potential and future prospects. While it may not be at the same peak as it was less than two years ago when Facebook rebranded to Meta, it is far from being dead.
The recent introduction of the groundbreaking Apple Vision Pro, priced at an affordable $3,500, has reignited interest in the metaverse and shed light on the immense possibilities it holds. This unveiling has served as a catalyst, reminding us of the remarkable advancements that lie ahead.
Admittedly, the current landscape presents challenges for startups in the metaverse industry. Venture funding has experienced a decline since Mark Zuckerberg’s influential name change announcement in late 2021. However, setbacks are inevitable in any rapidly evolving field, and the metaverse is poised for resurgence.
As innovators and visionaries continue to push the boundaries of this digital frontier, the metaverse’s potential remains boundless. It is merely undergoing a transformation and preparing for a new era of growth and innovation. The metaverse is far from dead; it is on the cusp of a thrilling resurgence, shaping the future of how we interact and experience the digital realm.
The numbers
Significant decline in funding for startups in the metaverse space has been observed, indicating a challenging environment for the industry. According to Crunchbase data, there has been a staggering 77% drop in funding from the final quarter of 2021 to the first quarter of this year.
It is crucial to acknowledge that late 2021 was a vastly different period in the funding landscape, with record-breaking venture funding. However, since then, the venture market has experienced a considerable downturn and shows little indication of a swift recovery.
Not only have the dollar amounts invested dwindled, plummeting from $2.2 billion in Q4 2021 to a mere $526 million last quarter, but the number of deals has also significantly decreased. In the final quarter of 2021, over 160 deals were announced, whereas last quarter saw fewer than 100.
During the final quarter of 2021, several substantial deals took place, including a $500 million investment in augmented reality startup Magic Leap and a $300 million Series D for fellow AR player Niantic. However, this year has witnessed no comparable rounds of funding. The largest deal, a $104 million investment, involved New York-based AI-powered car buying platform Impel, which utilizes some AR features but falls on the fringes of the conventional metaverse definition.
The subsequent largest round, a $70 million Series B for Orlando-based Red 6, occurred this month. Red 6 specializes in augmented reality solutions for training fighter pilots in collaboration with the United States Air Force.
Regrettably, the current quarter, which is rapidly approaching its end, has witnessed a meager $284 million invested in metaverse startups through a mere 46 deals. This data suggests a continued struggle for funding in the industry.
Even the slight increase in funding observed in the final quarter of last year is misleading, primarily influenced by the $1.5 billion Series E funding acquired by Costa Mesa-based defense and security firm Anduril. Although Anduril incorporates AR/VR technology in its software and hardware for the military and defense sector, it only partially aligns with the commonly accepted definition of the metaverse.
Bigger problems
Certainly, the metaverse adoption has faced challenges not only from VC investors, but from various industry players as well.
Microsoft, for instance, made the decision to shut down AltspaceVR, the social virtual reality platform it had acquired back in 2017. Additionally, the company disbanded a team that was specifically established just four months prior to assist customers in leveraging the metaverse for industrial purposes.
In another noteworthy development, Disney reportedly abandoned its metaverse initiative after laying off the team responsible for interactive storytelling.
Even Meta, the pioneering force behind the metaverse concept, appears to have shifted its focus towards the latest technological fascination, artificial intelligence, rather than extensively discussing the metaverse.
The Apple effect
Apple’s Vision Pro has sparked renewed excitement around the metaverse, and there are compelling reasons to believe this could be a significant development.
Unlike Meta, Apple has a proven track record of introducing groundbreaking devices that have revolutionized the tech industry. The company’s ability to transform abstract concepts into user-friendly and even iconic products is well-established.
In a bold move that further solidifies its commitment to AR/VR, Apple recently acquired Mira, an AR startup known for its lightweight headsets designed for industrial companies and the U.S. military. This strategic acquisition demonstrates Apple’s determination to expand its presence in the AR/VR space.
While some may have dismissed the metaverse as a fleeting trend, it’s important to recognize that building platforms like the metaverse or Web3 takes time. The necessary infrastructure alone requires years of development. Throughout this process, market dynamics will inevitably fluctuate.
It should be acknowledged that the metaverse’s revival is not guaranteed solely by Apple’s actions. The company has a history of limited collaboration with external developers, a critical element for the success of the metaverse.
However, with a market cap nearing $2.9 trillion, Apple towers over Nvidia, the current tech darling with its AI advancements, by nearly triple the value. This impressive financial standing positions Apple as a strong contender to bring the metaverse to virtual life. Given their reputation for innovation and market influence, the makers of the Mac have the potential to shape the future of the metaverse.