For the past 2 years, we’ve been investing at the earliest stage in founders building the Metaverse.

For us, this mostly means startups working in the fields of spatial computing, XR, AI, 3D software, digital twins, gaming infrastructure etc. To read more about our thesis and our current portfolio of over 20 startups, you can download our 2023 report HERE.

As we enter 2024 we wanted put together a quick post to share a list of topics and key themes we’ve been investing into and continue to be excited about for 2024.

If you are working on a startup, or investing yourself across any of these themes we would love to hear from you! Reach out on LinkedIn and submit details here 

1. AI: The Key To Unlock The Metaverse’s Full Potential

AI is obviously the darling of the venture world right now, with the “big bang” event of ChatGPT’s public launch last year. But machine learning and computer vision in various forms have always been crucial to the Metaverse and spatial computing. And with the recent advancements in generative AI, LLM’s and stable diffusion models, capabilities will continue to exponentially grow; from creating realistic avatars and virtual assistants, to generating 3D assets, voice synthesis and enabling new UIs.

To give some concrete examples within our portfolio, use cases include;

• Animating avatars (Move.ai)

• Powering in-world characters and virtual assistants for use cases from gaming to language learning (Unannounced portfolio company)

• Material capture for general 3D asset generation (M-XR)

• Creation of 2D and 3D gaming assets (Scenario)

• Creation of Virtual Environments (Graswald)

• Voice and audio synthesis (AiCoustics)

Multimodal AI too, is a new AI paradigm, in which various data types (image, text, speech, numerical data) are combined with multiple intelligence processing algorithms to achieve higher performances.

This opens the door for XR to be the new interface for AI. XR can go further than information overlays, and devices can see what we are seeing, providing a way for us to engage with our devices through sight, voice and beyond. We are always looking for more companies working in this space.

FOV Portfolio Highlights: Move.ai, Scenario, AiCoustics, M-XR, Graswald

2. AIGC Thrives As Gaming Becomes The New Social

An expanding demographic is spending increasing amounts of time in virtual worlds like Roblox and Fortnite, emerging as a new frontier for social interaction. And significantly, players aren’t just playing games - they are hanging out with friends and creating. As are the brands who are looking to get in front of this growing and lucrative demographic.

This generates demand for more sophisticated, and often AI-powered, tools to enable better (and more) UGC. Or as some have called it — AIGC.

As the rewards get higher - Epic excepts to pay out over $100M annually to creators on UEFN - creators will experiment with completely new formats as they look to create even more engaging content.

Tools to Quantify This New Era Will Be Essential.

While platforms like Roblox are increasingly allowing brands to activate in this space, brands need more data, intelligence and upskilling to become native to virtual spaces.

So there are picks and shovels needed here too. If Roblox is the new social, then brands need to understand and measure audiences and ROI here too. This is exactly what our portfolio company GEEIQ provides.

Other ‘third spaces’ will emerge alongside the current incumbents

Fortnite and Roblox have emerged as today’s most active ‘metaverses’, mostly revolving around games. But we are also very interested to see what other verticals and activities new platforms can be built around, as a new wave of spatial social media emerges.

Current FOV investments include Virtex, creating virtual stadium-like environments for sports fans. Atopia, the metaverse for arts and culture. RLTY, who make virtual world creation easy for everyone from existing communities to influencers. Starstuff, who are looking to solve the loneliness epidemic by bringing people together in creative virtual spaces. Makea, who enable creativity by allowing players to build high quality games with just their controller.

FOV Portfolio Highlights: RLTY, Atopia, Virtex, Ambient, Geeiq, Scenario, Starstuff, Makea Games

3. VR matures into ‘Spatial Computing’ as Apple’s Vision Pro Takes Headworn Compute Mainstream

Widening the Audience.

VR has made significant progress on its long march to the mainstream, with Meta alone seeing $2bn in revenues from its 25m+ install base. Gaming has been the key driver to date and we still think this is the perfect opportunity for new startups to become the large studios and consumer VR platforms of tomorrow (see Psytec Games). But there’s also been proven ROI for enterprise, despite the historically tricky GTM for startups in this space.

But with this imminent launch of the Vision Pro in February this year, Apple have now validated and expanded the category bringing an existing developer ecosystem, higher quality, and more mainstream use-cases including productivity, communications, media consumption and health & wellness (see Haven). We also expect to see other more aspirational categories find a natural home on the Vision Pro, such as arts and culture (see Atopia)

Positioned as a ‘spatial computing’ device the combination of productivity and Apple’s ability to create aspirational products will create VR buy-in from a more professional audience. Unlike the gaming centric messaging from Meta’s Quest line.

We believe this will usher in a new era for XR and prove to be a key catalyst and inflection point bringing in more interest from investors to CEOs who may have rejected the category before. Apple also bring the might of their retail store network for a product that really needs to be tried to be believed.

New Use Cases and New Entrants

Timing will be key here for startups. The Vision Pro won’t be a mass market device from day 1. But there is a potential first mover advantage for both existing iOS apps, and new spatial computing use cases who want to make an impact. Developers willing to find new spatial use case apps can go from 1 of 1,800,000 on the App Store, to 1 of 1000s specific for the Vision Pro.

Additionally, the ability to integrate with other Apple products, Mac, iPhone, Watch, AirPods, can present new XR use cases not possible with VR’s current suite of products.

But don’t expect Meta to rest on their laurels. While Apple will need to drive towards a lower price for its next generation headset, Meta can learn from Apple and look to include the best received features in future devices that will remain targeted at more of a mass market. And in 2024 we can likely expect new entrants such as Google and Samsung, picking up their VR efforts which got left behind in the first cycle of VR ca. 2017-18.

FOV Portfolio Highlights: Virtex, Haven, Psytec, Atopia, Doublepoint

4. Commerce Escapes The Flat Screen To Fully Embraces 3D

eCommerce has been a key catalyst for many innovations in today’s Internet. But even today we’re still buying products from static grids on 2D web pages.

Now AR and 3D are changing the way that physical goods are marketed and sold, whether that’s virtual try-on and show-rooms, 3D configurators and visualisations or even virtual goods themselves. Technology like AI-assisted creation tools, improved rendering and adoption of digital twins are accelerating this trend.

With Apple’s ARKit RoomPlan, anyone can point and create a 3D floor plan of a room. In a similar vein, Aino empowers retailers to embrace spatial commerce. And leveraging new technologies like NeRF and Gaussian Splatting, startups like Graswald are making it easy to capture assets and render them in realistic environments.

New tooling is paving the way to more immersive commerce with key drivers being things like improved 3D capture pipelines (see M-XR), better compression and rendering infrastructure as well as the broader adoption of realtime 3D engines and digital twins.

As a result it’s estimated that AR and camera commerce alone will drive $36bn in commerce by 2024 and things are only just getting started.

FOV Portfolio Highlights: Aino, Graswald, M-XR

5. Metaverse Meets Enterprise

When people think about the Metaverse they often think of the consumer use cases first. But everything from automotive to construction contain real world data. As such, there is an opportunity for ‘compute in the real world’.

The Metaverse is built upon a set of technological building blocks that are changing the way we work and even what jobs we'll do. Whilst Meta are busy focused on re-inventing meetings with virtual presence, we also think a lot about what Microsoft and Nvidia refer to as the Enterprise Metaverse.

We break this opportunity into two different areas and plan to spend more time on both of these in 2024.

Industrial Metaverse (blue collar work) - how can spatial computing be used to augment the worker or create digital twins and simulations.

Enterprise Metaverse (white collar work) - how can compute be expanded into 3D and spatial environments to enhance productivity, collaboration and connection.

FOV Portfolio Highlights: Aino

6. Deep Tech Pushes The Frontiers of The Metaverse

Deep tech will play a crucial role in building the infrastructure for more immersive computing and the metaverse. From addressing hard physics problems to developing next-generation hardware components, advancements are still needed in areas like optics, photonics, and sensors. Neural interfaces are being explored by everyone from Apple to Meta to allow for more natural interactions. Whilst 5G/6G infrastructure and new standards like Wi-fi 7 provide the connectivity required to do computing at the edge.

Intuitive User Interfaces Through Neural Interfaces

The exploration of neural interfaces by companies like Apple, Meta, and Snapchat marks a significant shift in user interface paradigms. By focusing on more natural and intuitive interactions, these technologies are set to redefine our interaction with digital environments. FOV portfolio company Doublepoint is one of the European startups blazing a trail in this space. Whilst companies like Nextmind sold to Snap in 2022.

Advanced Connectivity with 5G, 6G, Wi-Fi 7.

Connectivity is the backbone of the Metaverse and spatial computing. The evolution from 5G to 6G is pivotal in providing the high-speed, reliable network essential for real-time data processing and immersive experiences in these expansive virtual spaces. Meanwhile WiFi-7 introduces higher data rates with reduced latency, which means devices like headsets can become more responsive and immersive, pushing the boundaries for next-level spatial computing experiences. 

The Power of High-Performance Computing (HPC)

At the core of human computing and the Metaverse is the need for immense computational power. HPC systems, supercharged by deep tech, are indispensable for processing the vast amounts of data required for real-time simulations and interactions within virtual worlds. Finnish companies like Flow Computing have developed technology that accelerates CPU performance by 100x by creating a new type of parallel computing IP with full backwards compatibility to existing CPUs and applications.

FOV Portfolio Highlights: Doublepoint, M-XR, AICoustics

7. Transmedia

Thanks to disruptions to traditional media, traditional creative tools, and behavioural habits we are seeing changes across the production, distribution and consumption of media. The lines between, movies, games, IP, and social media are all blurring. There are more opportunities than ever to engage and grow audiences in unique ways, at scale.

The convergence of media forms and the rise of transmedia storytelling, especially within the metaverse, present exciting opportunities for creators and audiences alike. By embracing this evolving landscape, we can craft richer, more engaging narratives that push the boundaries of imagination and redefine the way we experience stories.

The startup opportunities are plentiful here. Recently we invested in AI-first games studio Iconic, who will be leaning into this transmedia trend.

For more details on this theme we recently published a series of content on our blog and our podcast.

FOV Portfolio Highlights: Iconic, Makea

8. Immersive Education

AI and virtual experiences will transform how we learn. More on this from us here.

With a proven ROI on experiential learning, this approach transcends traditional classroom boundaries, offering ageless and global opportunities for learning and skill development.

Experiential Learning Through Immersion: Immersive education leverages the concept that experiences create lasting memories, making learning more effective and engaging. Virtual environments provide a safe and controlled setting where learners can practice, experiment, and interact in ways that closely mimic real-life situations.

Tailored Learning Experiences with AI: AI plays a pivotal role in personalising education to cater to diverse abilities and learning styles. And apps like Duolingo have already made great strides in langauge learning. But imagine LLM-driven, 3D avatars for language learning that resonate with learners on a a more personal and experiential level. An 18-year-old practicing English with a peer avatar, rather than a 40-year-old teacher or a 2D mobile app.

The Post-COVID Digital Shift in Education: The COVID-19 pandemic has accelerated the adoption of digital tools in education, with schools increasingly budgeting for such products. This shift has opened doors for more innovative and immersive educational technologies, moving beyond traditional methods to embrace a more interactive and engaging approach to learning.

Portfolio Highlights: two startups still to be announced

9. A more powerful immersive, spatial web

As The Metaverse comes to fruition, gaming and 3D blur into an already perpetual online existence. At the centre of ‘being online’ is still the web browser. And this year, 46% of teens report being online “almost constantly”, a stat likely to break 50% in 2024.

In the past, switching between different media platforms was cumbersome. But today, however, this scenario has dramatically changed. Most media consumption - whether it's playing games, reading, watching, commenting, or sharing - is centralised on a single device, offering seamless transitions and unparalleled convenience for users.

The browser offers a frictionless portal between all states of activity, but often they are lagging far behind in terms of rendering speed, power and spatial ability. My kids are playing games and watching livestreams on the same browsers that were originally designed to read blogs, search articles and send webmail. For this reason, we invested in Ray Browser who are creating the next generation browser of games. They are leveraging emerging tools like WebGPU which should positively shape the future of the metaverse and gaming on the web.

Web technologies provide a common language for seamless interoperability between virtual worlds, while WebGPU unlocks breathtaking graphics and performance for immersive experiences. Just as the internet revolutionised how we communicate and access information, the web is poised to do the same for the metaverse and online gaming.

In addition to WebGPU, that brings improved graphics and better performance, WebXR and WebAssembly are also making it easier to create immersive experiences in-browser and across all fronts expect a lot more progress to be made in 2024 as emerging standards and protocols increasingly enable an open and better web for both spatial computing and more accessible gaming.

Another FOV investment in this area is Ambient - an open-source cross-platform runtime and platform for building, deploying and sharing high-performance multiplayer games on the web. With Ambient, you can make a game, deploy it to the browser in one command, share your URL and instantly play with others, no downloads or installs needed.

As the web continues to evolve, we can expect to see even more amazing and immersive metaverse and gaming experiences.

FOV Portfolio Highlights: Ray Browser, Ambient

10. The Digital World Blurring With The Physical

Marc Andreessen said software is eating the world… but really, the world is becoming software.

We live in two parallel realities, one of atoms and one of bits. We are looking for the companies working towards the blurring of the two.

At the moment computing is separate to the world, on abstract and separate 2D devices. But once you have a ‘programmable world’ that is a massive breakthrough. We can both digitally simulate our own world and new ones, as well as augmenting the physical world with digital information.

Yes, there is AR, but we can go further than just taking digital into the physical world. Like the aforementioned 3D commerce taking the physical and digitising it so you can put that into to digital spaces.

Microsoft Flight Simulator serves as a helpful example. It is the most realistic and expansive consumer simulation in history. It includes 2 trillion individually rendered trees, 1.5 billion buildings and nearly every road, mountain, city and airport globally… all of which look like the ‘real thing’, because they’re based on high-quality scans of the real thing.

It’s a high-level theme, but we’re looking for more startups that blur the digital with the physical.

Thanks for reading! If you are working on a startup, or investing yourself across any of these themes we would love to hear from you! Contact us on LinkedIn and submit details here