Augmented and virtual reality startups saw a collective $1.8B invested in 2016, far and away the largest year for funding to the space.

After the surge in AR/VR deals in 2015, when investments and corporate-driven M&A in the AR/VR space exploded, full-year 2016 still easily surpassed the prior year in both deals and dollars.

The year kicked off with a blockbuster funding quarter in Q1’16, largely bolstered by Magic Leap‘s $794M Series C mega-round in February, but subsequent quarters in mid-2016 showed a pull back in investor interest. However, funding and deals to the space bounced back significantly in the final stretch of the year, pushing AR/VR deals and dollars to new annual highs.

Annual trends

AR/VR funding in 2016 totaled $1.8B, which translates to 140% growth over 2015, and was far and away the largest year for funding to the space. Deals volume also hit 171, a 14% increase over the prior year.

Aside from Magic Leap‘s mega-deal ($794M Series C), the industry’s largest deals went to VR systems maker MindMaze ($100M), content platform NextVR ($80M Series B), and headset maker Osterhout Design Group ($58M Series A).

Quarterly trends

At the quarterly scale it’s more apparent that activity in AR/VR is beginning to stabilize.  Since peaking at 51 deals back in Q4’15, deal volume dropped for 2 straight quarters and held steady in the mid-40s for the second half of 2016.

Q4’16 saw some large deals, including the round to ODG ($58M Series A), gaming VR studio Survios ($50M Series C), and China-based mobile AR game maker NeoBear ($37M Series B).

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