In the hours after Facebook Inc.
announced plans to buy Oculus VR Inc., messages came pouring in
at Virtuix Omni.
“My inbox has been flooded by investors who want to touch
base,” said Jan Goetgeluk, 30, founder and chief executive
officer at the startup, which makes a treadmill-like device that
lets users move their feet to navigate within computer games.
Goetgeluk is in talks to raise $2 million of venture funding
from private and institutional investors.
Facebook’s $2 billion deal for Oculus, whose virtual-reality goggles have yet to go on sale, has given Virtuix Omni
and the burgeoning industry an instant boost. In announcing the
purchase, Facebook CEO Mark Zuckerberg touted virtual reality as
the next big computing platform after mobile. Avegant Corp. and
Vuzix Corp. said they’ve already been contacted by larger
companies, and interest is only increasing.
“A big player like Facebook entering the space is a great
validation on how virtual reality will be a mass-market medium,
reaching mass-market audience,” Goetgeluk said.
Like Oculus, his Houston-based startup raised its initial
financing -- $1.1 million for Virtuix Omni -- through
crowdfunding site Kickstarter Inc. Now, the 2-year-old company
needs money to bring the product, which can be preordered online
for $499, to market, Goetgeluk said.
Roger Entner, an analyst at Recon Analytics LLC, said
Virtuix Omni may be a takeover target for potential acquirers
including Sony Corp. (6758) and Microsoft Corp. (MSFT), which could use the
device to complement their existing video-game products, or
Google Inc., maker of Glass Web-connected spectacles.
Chasing Opportunities
“There are not that many companies” in the virtual-reality space, Entner said. “Right now, there’s more money
chasing good opportunities since the last time we had a
bubble.”
Virtuix Omni has booked 3,000 orders, yet so far hasn’t
received any takeover approaches, Goetgeluk said.
“If we received an offer, we would assess it then,” he
said.
With Oculus, Facebook follows Google in scouting for growth
beyond smartphones and tablets. While Apple Inc. (AAPL)’s iPhone and
Google’s Android dominate in mobile devices today, developers
are looking for new gadgets to showcase their wares and are
focusing on more lifelike experiences.
Potential Buyers
As other technology companies seek innovative ways to reach
consumers, traditional game makers such as Activision Blizzard
Inc. and Nintendo Co. might also be virtual-reality acquirers,
according Nic Mitham, CEO of KZero Worldswide, a consulting
firm.
Wayne Hickey, a spokesman for Microsoft, declined to
comment on potential acquisitions, as did Leslie Miller, a
spokeswoman for Google, and a representative of Nintendo.
Maryanne Lataif, a spokeswoman for Activision Blizzard, didn’t
immediately return an e-mail seeking comment, nor did Dan Race,
a spokesman for Sony.
“We’ve talked with a lot of companies that are very
interested in what we are doing,” said Ed Tang, CEO of Avegant,
which makes a head-mounted device called Glyph, used to play
games and watch movies. “It’s anyone from the military to the
medical industry to security.”
Glyph projects images directly onto a person’s retina,
which the company says helps avoid the side-effect of nausea
typical of many virtual-reality experiences. The Ann Arbor,
Michigan-based company, which raised $1.5 million on
Kickstarter, gets past the scarcity of content for virtual-reality players by being compatible with all kinds of devices,
Tang said.
“You can plug into your iPod, you can plug into your
PlayStation,” he said. “This is the beginning of the next
generation of computers.”
Interest Climbing
Paul Travers, CEO of Rochester, New York-based Vuzix, which
makes virtual-reality glasses for defense, enterprise and
consumer applications, said he has received takeover approaches.
“The level of interest is only climbing, and I can’t say
that we’ve not been approached,” he said in an interview.
Travers said he was surprised by the price Facebook paid
for Oculus, which was valued at $300 million in December,
according to people familiar with the company. Shares of Vuzix (VUZI),
which was founded in 1997, rose 7.1 percent yesterday to $3 in
New York, giving the company a market value of $28.6 million.
“I think it’s just fantastic,” Travers said. “From
virtual reality to augmented reality to wearable displays, it’s
going to change the world in so many ways.”
Digital World
Spark Capital, the Boston-based venture capital firm that
helped fund Oculus along with Matrix Partners and Andreessen
Horowitz, also invested in Thalmic Labs Inc., another maker of
wearable devices for the virtual world.
The Canadian company, whose armbands replace a computer
mouse by translating movements into digital inputs, is among
“the wearable devices which will take over the digital world,”
said Santo Politi, a partner at Spark who led the firm’s
investment in Oculus and sits on the board.
Not all virtual-reality creators are as optimistic about
Facebook’s purchase of Oculus, which only recently began selling
an updated version of the Rift headset to developers for $350.
Rish Mitra, co-founder and CEO of Blippar, an augmented-reality
mobile application that lets its 5 million users browse and
interact with objects, says Oculus sold too early, and he
wouldn’t have done the same.
Developer Trust
“Oculus’s product is a promise which has not been
realized,” said Mitra, a 34-year-old native of New Delhi.
“Being bought by a company which the games developers don’t
trust might hurt them.”
Blippar has turned down investments from Silicon Valley
venture capital firms and rebuffed takeover approaches, Mitra
said. The company he co-founded two years ago in London raised
$300,000 from Qualcomm Ventures and is already profitable,
thanks to revenue from advertisers and publishers.
“In five to 10 years the Internet will be merged in the
physical world,” he said. “Blippar can dominate the Internet
when it gets there.”
Facebook’s push into virtual reality might also make it
tougher for the rest of the nascent industry to compete, said
Kobie Fuller, a venture capitalist at Accel Partners.
“It’s hard to see anyone who comes close to what Oculus is
doing,” said Fuller, who personally invested in Oculus’s first
round of financing before joining Accel in July. “Facebook
entering the space is just going to make it harder for those who
want to keep up.”
