Alibaba Group Holding Ltd (NYSE:BABA) has led the latest funding round for virtual reality startup Magic Leap Inc., which raised $793.5m.
The exercise saw new investors such as JPMorgan Chase (NYSE:JPM), Warner Bros., Morgan Stanley Investment Management and Fidelity Management and Research Co., chip in. Current investors such as Alphabet Inc.’s (NASDAQ:GOOG) Google, which led the previous fundraiser, and Qualcomm Inc., also contributed their share.
The Dania Beach, Florida-based Magic Leap is working on a computing platform that “will provide users with a digital experience that is fused with their physical lives”.
Jargon stuff aside, this means that the company will develop an headset that relies on a type of light-field technology for simulating 3-D images that are visible to the naked eye. This means it will manipulate light patterns reaching your eyes, making you see virtual objects the same way you naturally see real things.
Google Among Early Investors
Magic Reality, which is led by serial entrepreneur Rony Abovitz, counts Google as one of its earliest investors. The Internet giant led a funding round of $542m in 2014 that was the largest single investment in virtual or augmented reality industry at that time. Later that year, Facebook Inc. bought out Oculus VR, which had earlier raised $93m from angel investors, for about $2bn.
The newest financing round brings to a total of $1.4 billion that Magic Leap has raised. This now brings its total value to $5bn, renowned tech website TechCrunch reported.
As part of the funding deal, Alibaba has nominated its executive vice chairman Joe Tsai to the Magic Leap board.
“We believe Alibaba can both provide support to and learn from such a partner, and we look forward to working with the Magic Leap team,” Tsai said upon his appointment.
Magic Leap has remained secretive about the design of its final product, though it plans to partner with Alibaba to introduce the headset to the latter’s vast client network estimated at over 400 million users.
Alibaba Safest Bet Yet
Alibaba’s Chairman Jack Ma announced last year plans to invest in U.S. technology startups, with a vision of assisting them to enter the Chinese market. The company has funded an average of five U.S. startups every year since 2013, data from CB Insights shows.
By investing in Magic Leap, Jack Ma and Alibaba co have placed one of their smartest bets. This is due to the fact that virtual and augmented reality technology is projected to change how we use computers. With sensors placed across a room and super-fast processors to back them up, it might be possible to project virtual images on top of physical world, providing viewers with a surreal visual experience.
Moreover, Magic Leap is led by a safe pair of hands in Abovitz, who has previously sold his startup, Mako Surgical for $1.65 billion.
Microsoft Corporation (NASDAQ:MSFT) and Facebook Inc (NASDAQ:FB) are among the major tech firms racing to develop products based on virtual or augmented reality technology. However, Magic Leap says its technology, which it refuses to divulge, works differently from any other one available in the market.