Magic Leap, the secretive US start-up, confirmed on Wednesday that Saudi Arabia’s sovereign wealth fund would invest $400m in the developer of “mixed reality” headsets, as it races to get ahead of competing efforts from Apple, Microsoft and Facebook.
The funding from Saudi Arabia’s Public Investment Fund along with a further $62m from a group of unnamed investors takes Magic Leap’s total fundraising to $2.3bn. Founded in 2010, the Florida-based company has yet to release a single product to market.
The PIF joins Magic Leap’s other big-name backers including Google and Alibaba. The total of $462m comes as an extension to the $502m round it raised in October, led by Singapore’s Temasek, and values Magic Leap at about $6bn.
Many of the world’s leading tech companies are working on similar headsets that would blur the line between the digital and physical worlds, building on the “augmented reality” effects already found in mobile apps such as Pokémon Go and Snapchat.
“The Magic Leap team and I are happy to welcome the Public Investment Fund and the other new investors to the Magic Leap family. We look forward to having them join us on our journey to build an amazing future,” Rony Abovitz, the former surgical roboticist who founded Magic Leap, said on Wednesday, confirming an earlier report of the financing by the Financial Times.
The announcement comes as Saudi Arabia’s crown prince, Mohammed bin Salman, is expected to visit the United States later this month and unveil investment deals.
The 32-year-old heir to the Gulf kingdom’s throne has been using the $230bn state fund as a vehicle to make bold investments that are intended to help diversify the country’s economy from a reliance on oil.
The PIF took a $3.5bn stake in Uber in 2016, but appeared to be shying away from striking solo deals in technology companies after agreeing later that year to put $45bn in an investment fund managed by SoftBank, the Japanese conglomerate, which is led by its founder Masayoshi Son.
But a deal with Magic Leap, which the Financial Times revealed last month, upends that logic.
The new capital will fuel Magic Leap’s ambitious plan to “harmonise people and technology” with a so far unreleased “mixed reality” headset. Yet beyond demonstration videos, few people beyond its investors and a small group of app developers have seen its technology. The company has suffered delays in bringing its product to market, causing some industry observers to question whether it can deliver on its outsized promises.
Mr Abovitz has said that “techno-biology” will take over from smartphones and PCs as many people’s primary way of interacting with technology. He claims that using Magic Leap’s headset will provide a more natural way to use productivity software or view entertainment.
Silicon Valley executives including Facebook’s Mark Zuckerberg, Apple’s Tim Cook and Microsoft’s Satya Nadella have suggested that the ability to mingle realistic digital images with the physical world will prove the next frontier in computing. However, after the limited success of virtual reality, these companies are investing heavily in the hopes of achieving a technical breakthrough that can convince mainstream consumers to wear computers on their faces.
https://www.ft.com / Arash Massoudi & Tim Bradshaw