VR companies braced for 2022 after record investment

Innovative startups are cropping up in the UK virtual reality market after it recorded its strongest 12 months of private fundraising to date

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The UK’s virtual reality (VR) sector is celebrating after recording its strongest year of investment to date in 2021.

Analysis by Arden Partners plc, an institutional stockbroking company, has revealed that £154m worth of capital flowed into the private virtual reality sector last year – a 72% increase on 2020.

This was driven by an unprecedented surge of investment in Q4, with the £72m raised smashing a previous sector record of £46m in the final quarter of 2018.

UK VR’s growth trajectory

VR is currently an incredibly fast-growing market segment. UK revenues are set to grow by 31.7% in 2021, and are projected to increase at the same rate over the next five years.

Our own 2021 Startups 100 index, which celebrates the most disruptive new businesses in the UK, highlighted the many startups that are using virtual and augmented reality (AR) to meet consumer demand in 2022.

These include Virti, an immersive solution for healthcare simulation and training. Also, Manchester-based PixelMax, which creates virtual workplaces based on the metaverse.

Metaverse boosts VR investment

Arden’s report suggests that the rise of virtual spaces is largely thanks to the rapid acceleration of the metaverse, which is peaking investor interest and becoming a key business buzzword.

The idea is for a simulated digital environment that uses VR, as well as augmented reality and social media, to create spaces for digital user interaction that mimic the real world. (Think Ready Player One, but as a Zoom meeting.)

Lots of Big Tech leaders are rapidly investing in VR technology as a result of the growing interest.

Most notably, this includes Mark Zuckerberg, who recently announced that his company, Facebook Inc, would be changing its name to Meta Platforms Inc., to reflect a new focus on building the metaverse. Meta already owns the Oculus VR headset product line, and Zuckerberg is betting big on the metaverse being the future of digital interactions.

Alex DeGroote, Research Director at Arden, explained: “The unprecedented level of private capital investment in the virtual reality sector, and particularly in the final quarter of the year, indicates how much investors are really starting to see how this market is set to explode. We have also seen a wave of companies in this space turning to the public equity markets and expect this to continue.

“With new virtual ways of operating becoming much more widespread in many consumer and professional sectors post-Covid, we envisage an exponential rise in both private and public capital investment into the virtual reality sector as consumers and companies look for new ways to communicate and operate.”

Startups showcase VR innovation

Last year, we released our top 100 startups index for 2021, which highlights the most disruptive businesses that were founded in the last five years.

Many of the innovative businesses we featured are using cutting-edge VR solutions to deliver a state-of-the-art service for users.

Virti, which came in at number five on our list, is one such business that’s bringing impressive new technologies to the healthcare training market.

By employing VR software, coupled with AI, Virti can bring users into difficult to access environments. Inside a virtual, risk-free setting, the software then securely assesses trainees to analyse and improve their performance.

In barely three years, the startup has achieved unprecedented growth, tripling its team size in 2021 and recently closing a £7.3m Series A investment in a highly competitive round.

successentrepreneur_alex_virti

In our interview with Virti founder, Alex Young last year, he told us that the pandemic had created “a huge acceleration in the shift towards remote working, remote employee recruitment, virtual training, and even virtual conferencing.

“The need for effective remote training and collaboration tools has never been higher, so our market has grown rapidly in just a few months. Virti grew almost 1000% last year alone, as demand for effective digital training solutions skyrocketed.”

Then there’s PixelMax. Launched in 2018 by Shay O’Carroll, Andy Sands, and Rob Hilton, PixelMax is an immersive communications platform that uses 3D technology to streamline business communications, from virtual events, to unified comms and data visualisation.

Like the Metaverse, PixelMax provides its business users with a central, unified platform to manage all communication, both internal and external.

At a time when new Covid-19 variants are still emerging, and the hybrid working model looks set to stay for the majority of businesses, emerging startups such as Virti and PixelMax are poised to make a real impact in the growing VR sector.

Helena is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has previously written for a popular fintech startup covering everything from money-saving tips to cultural reviews.

She is particularly interested in project management software and the films of Peter Jackson.

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