Welcome to this month’s curated digest of viewpoints, news and investment activity covering the Metaverse, XR and Spatial Computing. If you know of founders, investors or anyone else that would find this investment-focused digest useful then please pass it along!

Dave Haynes & Petri Rajahalme (FOV Ventures)

Fundraising Round-Up

NFT's have been subject to a number of heated debates and commentary in the past month. But given that many think NFT's will play a huge role in the Metaverse (and beyond) it was no surprise to see OpenSea, the biggest NFT marketplace, raise a further $300m from Paradigm and Coatue. And for people creating NFT's, they'll be pleased to hear that Drop GG raised $8m to build an AR platform that allows them to mint, sell and view their NFT's in the real world. Meanwhile Wilder World, yet another new virtual world has raised $30m from Animoca Brands and Metapurse, to play alongside the likes of Decentraland or Sandbox. And to help all of this get built, Finnish startup Kleoverse raised $1.2m for its platform that matches web3 talent with relevant DAOs and projects.

Over in XR funding, and off the back of Quest winning Xmas (as covered last month), VR gaming studio Alta has raised $12.4m from Makers Fund and Andreessen Horowitz and virtual music concert platform AmazeVR pulled in another $15m. Whilst on the enterprise side, Apprentice raised $100m for its healthcare and pharma-facing AR solutions.

Emerge ($13m) and Wisear ($2.5m) both raised rounds to rethink what interfaces we'll need in the Metaverse. Whilst Refract attracted $8.5m for its full body motion capture technology that competes with the likes of Xsens and Rokoko. Or if synthetic creation is your thing then look no further than Metaphysic, the AI startup behind those Tom Cruise deepfakes that has now raised $7.5m.

And it's a good time for wannabe Metaverse creators. Founded by Unity veterans, Yahaha Studios from Finland have raised $50m for its no-code game creation metaverse, whilst Spire Animations raised $20m from Epic Games as it aims to produce animated films for the Metaverse. This last investment from Epic comes just after it revealed the complete list of MegaGrant recipients in 2021, comprising a whopping 390 individual projects, 21 of which were solely focused on XR. Other Metaverse platfoms are now weighing in with their own creator funding programs. Sandbox announced its own $50m fund and startup accelerator program. Whilst South Korea’s Naver Z that runs Zepeto has launched a $100m fund.

Exits and M&A

If the Metaverse is starting to look like a gold rush, then you can be sure that a big focus of M&A over the coming year will also be in the 'picks & shovels' category as we discussed with Sifted a few weeks ago. Unity made 9 acquisitions in the past 12 months, whilst Epic clocked in at 7 purchases in a similar timeframe. January ended with an announcement that Unity had acquired Ziva Dynamics for its avatar tech. This follows hot on the heels of last month's $1.6bn acquisition of Peter Jackson's Weta Digital and is the company's response to rival game engine Epic's own MetaHumans creator. As Tom Emrich's points out in his 22 AR trends for 2022, expect the avatar wars to continue this year.

Meanwhile, audio got some attention this month too. At the same time as we were being quoted in another Sifted piece about spatial audio in the Metaverse, Meta acquired Greek startup Accusonus (ca. €70-100m) for its patented music generation tech and Apple acquired UK-based AIMusic (price undisclosed).

The big news of the month though was Microsoft's acquisition of Activision Blizzard for $69bn, which Satya Nadella stated in this great FT interview would help power the company's move into the Metaverse. Sony responded by shelling out $3.6bn for Bungie. This was perhaps less of a Metaverse play but certainly the latest in a string of big-ticket consolidation deals in the games industry.

Less covered was several moves on the hardware side of things with Snap acquiring Compound Photonics and Meta snapping up Image Optix, both of which hint towards the optic tech in the two rival company's future XR headsets. This comes after a flurry of new AR headset related announcements post-CES from Magic Leap, Huawei, Vuzix, ThirdEye, DigiLens, TCL, Qualcomm and Microsoft. 2022 likely won't be the year that AR glasses go mainstream, but there sure is a lot of activity in the space.

Elsewhere, UK gaming investor Hiro Capital has launched a £115m SPAC seeking Metaverse acquisitions. And on the Enterprise side, Qualcomm acquired Ukranian startup Augmented Pixels, PTC purchased talent & IP from RE'FLEKT and CareAR acquired MagicLens, a 3D visualisation and AR platform.

Datapoints

• Quest store surpasses $1bn in content revenue

• Apple has 14,000 AR apps on its App Store

• Monthly-connected VR headsets on Steam hit 3.4m in January

• Google is reportedly building its own AR headset

• Baidu launches its own metaverse platform XiRang

That’s all for now. Have a great February and please do send us your feedback, comments or any interesting new startups you know of in this space! Keep posted for some exciting news and a new website next month :)

Dave Haynes & Petri Rajahalme (FOV Ventures)