XR Talks is a weekly series that features the best presentations and educational videos from the XR universe. It includes embedded video, as well as narrative analysis and top takeaways.
Investors tend to have a good vantage point of emerging markets. Through requisite diligence, they see a lot. So how does that look for XR investors specifically? Following our report last fall on investor insights, we got a similar glimpse recently during an AWE panel (video below).
Starting with some of the things they look for, Qualcomm Ventures’ Richard Tapalaga invested in Magic Leap after vetting its full-stack approach, and technical chops to pull it off. Though ambitious, it can be considerably advantageous in terms of vertical integration, a la Apple.
“You’re basically incubating five or six distinct companies within one,” he said. “But the interesting part is that you’re able to move each of those technologies — whether it’s display, hardware, UI, software — all at the same rate, so the end experience is very tightly integrated.”
Another key factor for investors is the founding team. Comcast Ventures’ Michael Yang (see our past interview) has a specific formula that predicates teams with technical, creative and business talent. This engenders checks and balances, as well as cross-disciplinary edge.
“[We’re] focused on three skill sets or three attributes of talent on the founding team,” he said. “One is a business lead, one is a creative lead and one is a technical lead, and we would not invest in a company unless you had all three of that magic triangle.”
Another key founder attribute is passion. And that can be seen in how scrappy and lean they’re willing to get in the process of turning their idea into a company. Positive signals can also come from teams whose product aligns with personal interests or some sort of shared higher purpose.
“In early days, they were sleeping in the server room,” said RRE Ventures’ Alice Lloyd George of her porfolio company the WaveVR. “And they live and breathe the product. The first use case is really music and it’s very music oriented. Everyone on the team plays music or makes music.”
For Samsung Next’s Ajay Singh, one of his key signals for founder success is resilience. Because XR is so early, he wants to see founders with survival skills for hunger games-style industry shakeout. That can usually be seen in the overt dedication to their ideas, and personality types.
“It’s not just how cool the tech or the demo is and all the shiny stuff, but can they stay alive?” he asked. “The next few years are going to be tell-tale in terms of how much AR and VR show traction. So with any company we invest in, founders need that passion and resilience.”
For the same reasons, adaptability is key. There should be a balance of stubborn passion for an idea.. and some adaptability about how it will be brought to market. That’s simply because, again, we’re so early in XR’s life cycle that the prevailing form factors and platforms are uncertain.
“We don’t really know what the form factor is going to be,” said Alice Lloyd George. “So having that adaptability built in so that you can move on to another platform is really important: Being able to navigate across those and say ‘I’m not necessarily tied to this HMD or smartphone’.”
Lastly, beyond product and team success factors, it’s always useful to hear what investors look for in a pitch. That can be like gold to any startups that are in or entering a fundraising process. And like we examined in the aforementioned report, there are often dos and don’ts.
For one, Comcast Ventures’ Yang cautions against vanity metrics. He expects to see unrealistic charts that go up and to the right… but those should just be conversation starter. What he really wants to see is founders who can go one level deeper in more tactical discussions about growth.
“I’d rather have a conversation that way because then I understand how you think about the business,” he said. “The data will tell what it is, but at least I have confidence that you as a manager and executive get how, if you had capital, you would run the business.”
See the full session below, moderated by WXR founding partner Martina Welkhoff.
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Disclosure: ARtillry has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.