Can Magic Leap, which has spent its $4 billion valuation cut in half and then raised $500 million in financing, still make a comeback?

In October 2021, Magic Leap announced the completion of a $500 million financing, and the injection of new capital will further promote Magic Leap’s focus on enterprise AR solutions.

At the same time, its second-generation product, Magic Leap 2, which will be launched in 2022, was also officially exposed. At this time, the company’s valuation is still as high as 2 billion US dollars.

The outbreak has changed the way consumers and businesses work, becoming a major catalyst for the adoption of AR technology, and a company that was on the brink of bankruptcy in 2020 has suddenly become a sweet spot for capital once again.

In the early years, because AR products had not been recognized by consumers, Magic Leap, which was in the development stage, had to face the reality of stagnant product sales.

On September 5, 2020, the technology media company The Information wrote in a report on changes in the valuation of start-up unicorns that Magic Leap’s valuation has dropped significantly. In just one year, the company’s valuation has increased from 2019’s valuation. $6.4 billion has shrunk to $450 million today, a drop of 93% .

But Magic Leap also had its moments of brilliance. In 2015, with a video of a whale jumping high from a gym, it got a lot of attention from consumers and capital, and a round of financing followed, making it in just three months. Just completed $1.6 billion in financing, allowing everyone to re-understand this AR black technology company.

So, what happened in the 10 years of ups and downs of Magic Leap, what caused Magic Leap to shrink from a valuation of $6.4 billion to only $450 million, and why did it get the attention of capital again last year?

What kind of company is Magic Leap?

In 2011, Magic Leap released an AR App called Hour Blue, which officially landed from a studio to a technology company focusing on AR.

The small company, which has been obscure, ushered in his “first prize” in the fall of 2014. Search giant Google and well-known investment institutions such as Qualcomm Capital invested $542 million in Series B financing for them.

In addition, Google CEO Sundar Pichai also joined Magic Leap’s board of directors.

Such a small company suddenly received such a huge amount of financing, and Magic Leap instantly became the center of attention.

But no one seems to be able to clearly say what kind of company this is, and the mysterious Magic Leap has even caused a lot of media speculation.

In 2015, Magic Leap released a video that caused a sensation in the industry: a huge whale leaped out of the center of the basketball court. Magic Leap became an instant hit and started his financing myth.

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In March 2015, Magic Leap released a video of an AR shooting game, but the company did not have a similar authenticity statement at the time; in December of the same year, Magic Leap completed a $827 million Series C financing, fully diluting the valuation after the financing. has reached $3.7 billion.

In the second year, Magic Leap received another US$793.5 million in Series C financing. Alibaba was the main investor in this round of financing. Google and Qualcomm also participated in the investment. Also participating in the investment were JPMorgan Chase Bank, Fidelity Management, Research Corporation, and Morgan Stanley. Danley, Wellington Management Company.

After completing the C round of financing, Magic Leap has a valuation of at least $4.5 billion.

However, when it was favored by many investors, Magic Leap had not even officially launched its hardware products, but from the valuation point of view, Magic Leap has become a top startup company.

In October 2017, Magic Leap completed USD 502 million in Series D financing, led by Singapore’s Temasek, with EDBI, Grupo Globo, Janus Henderson, Alibaba, Fidelity Investment Group and other companies participating in the investment.

For the past few years, Magic Leap founder Rony Abovitz has been telling the masses how cool his headset is, while using Twitter to keep adding more mystery to his products .

Until August 2018, Magic Leap’s first product “Magic Leap 1” finally came out.

Magic Leap 1 uses the same optical waveguide technology as HoloLens instead of the previously announced optical fiber scanning technology. The horizontal field of view is only 50%. The announced new operating system LuminOS is actually just a skinned Android system. To say its products are extremely disappointing.

After repeated obstacles, Magic Leap began to gradually develop towards the enterprise market. Affected by the epidemic, people’s home demand has risen rapidly, and the popularity of the Metaverse concept has brought new opportunities to the AR industry.

The reason behind the 93% drop in valuation

The development of Magic Leap can be described as a roller coaster of steep twists and turns. From the initial blockbuster and a valuation of up to 6.4 billion US dollars, to a sharp turnaround, the valuation plummeted 93% to only 450 million US dollars, and then the valuation recovered to 2 billion. The US dollar seems to be the process of a young and famous teenager who has experienced the blow of reality and then slowly matured. What happened?

At first, Magic Leap became popular at the end of 2015 with the concept video of “whale jumping out of the water”. Because the picture effect is very real, it can be real, so that every viewer can feel what this new technology can bring. impact.

As a result, Magic Leap became an instant hit, quickly gaining investment from giants such as Google, Alibaba, Fidelity, and Temasek.

However, success or failure is also Xiao He. This concept video is so well done that everyone has high expectations for Magic Leap’s products.

In August 2018, Magic Leap’s first product, Magic Leap 1, was long overdue. However, after waiting so long and expectations so high, the presentation of the final product was a mess .

Magic Leap 1 not only has a horizontal viewing angle of 40 degrees, but its so-called new LuminOS operating system is just a skinned Android system, and its technology uses the same optical waveguide technology as Microsoft’s XR hardware Hololens. The advertised optical fiber scanning technology, the most important thing is the effect displayed by the picture, is also very different from the previous concept video.

With such a big psychological gap, the Magic Leap 1’s price of $2,295 is not cheap, and it is naturally difficult for the market to accept it.

As a result, this long-awaited product, under the premise of its CEO’s rhetoric that it would sell more than one million in the first year, finally received only thousands of orders around the world, and it ended bleakly.

Such performance is intuitively reflected in the capital market level, Magic Leap’s valuation plummeted by 93% like a dive.

Subsequently, a large number of scientists left, and Magic Leap had to continue to survive and conduct large-scale layoffs, and Magic Leap founder Rony Abovitz also resigned as CEO.

Although Peggy Johnson, the former executive vice president of business development at Microsoft, was recruited as the new CEO, more and more executives have also left Magic Leap.

It seems that Magic Leap has reached the point of exhaustion. Fortunately, in 2021, the concept of the Metaverse will suddenly become popular all over the world, and by the way, it will also bring fire to related companies that are deeply involved in the VR/AR technology of the Metaverse. These VR/AR companies have regained the attention of capital and Under the blessing of the Metaverse with great potential, capital has a newer understanding of them .

Magic Leap has undoubtedly turned the tide and obtained a new round of financing of 500 million US dollars. Magic Leap is no longer just a device, but a hardware entrance to the Metaverse, and its valuation has also recovered to 2 billion US dollars.

How did Magic Leap get a new lease of life?

It’s hard to imagine Magic Leap going downhill like a roller coaster to the top.

First, the product “Magic Leap1” launched in 2018 failed because its performance and technology were far from meeting user expectations. Magic Leap was therefore labeled as a “liar”, and the market had mixed reviews for it.

In 2020, Magic Leap is facing the layoff of nearly half of its staff. The former CEO resigned and stepped down. Magic Leap, which was once in the limelight, fell to the bottom in 2020.

In the face of such a crisis, how did Magic Leap, the former AR unicorn, turn its back on the wind?

Three fires when the new official takes office

In August 2020, Magic Leap’s former CEO Rony Abovitz resigned, and former Microsoft executive Peggy Johnson took over as CEO.

After taking office, Peggy Johnson began a radical overhaul of management, changed the chaotic internal operations, and completely shifted the focus of Magic Leap’s business from the consumer market to the enterprise market.

It is understood that during his tenure at Microsoft, Peggy Johnson has been responsible for managing the establishment, maintenance and promotion of partnerships between Microsoft and companies around the world. He has led Microsoft’s corporate venture capital M12, helping the company to discover a series of compelling strategic investment opportunities. And work closely with third-party businesses to unlock real value and drive growth.

Unlike Rony Abovitz, who is obsessed with turning romantic technological fantasies into reality and ignoring business costs, Peggy Johnson is more concerned with business reality, trying to establish a lasting strategic relationship between disruptive technologies and digital needs of enterprises of different sizes and industries. relationship .

Compared with the high-profile romantic style of the past, Magic Leap’s new strategy is more pragmatic and open.

Two crucial financings

In May 2020, Magic Leap turned around for the first time. A $350 million financing proved that the enterprise market valued this once “star company in the technology circle”, and also provided new vitality for Magic Leap, which was in a low ebb.

In September 2021, Magic Leap received another $500 million in financing, and this round of financing brought the company’s valuation to $2 billion.

Peggy Johnson said Magic Leap’s two new rounds of financing give it greater flexibility in funding and resources to help sustain Magic Leap’s continued growth in its industry-leading AR technology.

The updated Magic Leap 2

The Magic Leap 1’s slump in sales didn’t stop Magic Leap from trying to make the leap from rock bottom.With the concept of “Metaverse” bringing new enthusiasm to the VR/AR industry, Magic Leap has ushered in good news at the product business level.

Since the end of 2021, Magic Leap executives have been constantly warming up for new products, and Peggy Johnson has also appeared in interviews and large-scale conferences many times, saying that a new generation of Magic Leap 2 will be launched soon.

Magic Leap 2 was officially released until July of this year, and will be available to businesses and the public for purchase at the end of September.

It is worth noting that compared to Magic Leap 1, which was poorly positioned and failed to reach its target market, Magic Leap 2 is an enhancement designed for the enterprise market for training, remote assistance and any kind of 3D visualization application. type product .

In addition, Magic Leap 2 has also received many improvements in hardware. It is equipped with 18 sensors while reducing weight, supports new functions such as eye tracking, dynamic zone dimming, and even is equipped with a 6DoF handle with a built-in camera.

In addition, Magic Leap also disclosed four optical innovations: doubling the field of view and halving the size; dynamic dimming to support bright outdoor environments; improving optical module manufacturing capabilities; simplifying the optical system to make users comfortable to wear, etc.

Not only that, Magic Leap 2 will also integrate AR platform, hardware and software to ensure the security of sensitive data. In addition, the product can be integrated with enterprise cloud services and integrated into the daily workflow of the enterprise.

At the same time, Magic Leap has continued to pursue the victory and has started the research and development and design of the third-generation product. According to official reports, the field of view of Magic Leap 3 is expected to be twice that of Magic Leap 1, bringing users a more immersive AR visual effect.

If the AR track is compared to a 100-meter arena, whoever can overcome the technical barriers in a short period of time can become a competitive enterprise .”

Industry experts said that in order to outperform this competition and regain a new life in the AR technology circle, Magic Leap must not only change the original image of “talking but not practicing fake handles”, but more importantly, improve the core competition of its technology products force.

I believe that the market feedback brought by Magic Leap 2 will give an answer soon.

What exactly is Magic Leap’s vision?

Although Magic Leap’s products are not satisfactory, and it was once criticized for being suspected of misappropriating money, but putting aside these gossip and gossip, to understand Magic Leap’s original intention and vision, in order to understand it more deeply.

Magic Leap has actually long wanted to paint a vision of the future of the web like The Matrix, the Metaverse in Neil Stephenson’s Avalanche, the Oasis in Ready Player One, and many other positive versions of sci-fi utopias and dystopias. become reality .

These ideas and trends need to be communicated to people, and the way they are displayed is like the whale in the Magic Leap video, and it needs enough impact.

Therefore, the concept video of the year can not be regarded as Magic Leap’s product video, but should be regarded as an expression of their vision, and Magic Leap’s vision is indeed closely related to the Metaverse.

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Interestingly, today, when the Metaverse is very hot, we can see that many companies have proposed the XX+verse word creation method, which is intended as an understanding of the concept of the Metaverse. For example, the social Metaverse is the Socialverse, or its own. Brand name +verse, to create a brand Metaverse.

Magic Leap proposed Magicverse in 2018 before the concept of the Metaverse became popular. Although the term Metaverse was not popular at the time, their description of Magicverse was no different from the current Metaverse.

Magic Leap has been thinking about what the future Internet will look like: in the future, we may see the entire Internet break away from cyberspace and begin to exist in the real world.

When we say the Internet, it will have spatial properties.

In the future, the way people interact with the world will become very complex. Technology like Magicverse is equivalent to extracting our best display layer, and Magic Leap hopes to fill the entire real world with AR .

Can Magic Leap reach a market value of 10 billion?

The international data agency IDC recently predicted that AR glasses will achieve sales of 23.4 million units in 2025.

In 2021, AR terminal hardware shipments will only be 280,000 units. Therefore, IDC said that from 2020 to 2024, the compound annual growth rate of global augmented reality (AR) terminal shipments will reach 188%.

At the same time, IDC also predicts that AR market spending will reach $5.9 billion this year and $45.6 billion in 2025.

Therefore, from the perspective of overall market data, the market growth rate of AR glasses still has strong vitality, which is an important reason why Magic Leap has regained attention in the past six months.

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As new CEO Peggy Johnson said, “I think there’s enough interest in manufacturing, medicine, and defense that any of those fields deserve a separate business,” reflecting its commitment to the future of AR. optimism.

While Magic Leap founder Rony Abovitz has left the team (reserving a board seat), he launched a new company called Sun and Thunder in early 2021, focusing on AI characters and interactive narratives, better known as virtual Human direction, but he is still full of expectations for the development of AR.

Rony Abovitz predicts that between 2022 and 2030, it is widely believed that AR technology is likely to break through, although a full paradigm shift will not occur until after 2030 .

We don’t know how he came to this conclusion, but his important contribution to Magic Leap is worth remembering.

As an important flagship product of Magic Leap, Magic Leap 2 is expected to be officially released on September 30. The price of the basic model has come to $3,299, which is much higher than the price of its original product of $2,295.

Of course, such a price is not friendly to C-end users, and this is the reason for its transformation to B-end users. Earlier news revealed that more than 35 companies have been testing the use of Magic Leap 2.

At present, we can’t predict the market performance of this ace product Magic Leap 2 very well, but if it is estimated according to the data of its annual product of 100,000 units, it will be a market revenue of billions of dollars. It seems that It seems that the $4 billion that has been burned in the past 11 years will soon be made up.

But the logic tells us that according to the current market growth, the total sales of AR terminal hardware in the next 12 months should not exceed 600,000 units. It is not easy for Magic Leap products to occupy one-sixth of the market share. Tech giants like Apple and Microsoft have also begun targeting the AR field .

As for whether Magic Leap can become a company with a market value of 10 billion, perhaps the sales of Magic Leap 2 will largely determine whether this feast can continue, otherwise even Magic Leap, which has stepped on the outlet of the Metaverse, is just another flash in the pan.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/can-magic-leap-which-has-spent-its-4-billion-valuation-cut-in-half-and-then-raised-500-million-in-financing-still-make-a-comeback/
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