Spring is coming for VR applications

Anand Dass
7 min readNov 9, 2021


Investment disclaimer: The data and opinions expressed here are my own, and in no way represents my employer’s point of view. Also, if you plan to use this to make investment decisions, I am not responsible for the outcomes :-). Use at your own risk! I will continue to periodically refresh and share these data sets and lists as a free to use, community resource. So,

  1. If you are an investor DM me about your founders/startups in VR who are paving the future of experiences outside of games. Will happily play-test and include them in the follow-on note I plan to publish on top applications & experiences. Also if you are looking to invest in VR/AR, let me know and I’ll help make connections to founders as best as I can.
  2. If you are a VR founder who has raised money in the last 6 months, please share your company and fund raising stats anonymously 🚀🔥 here 🤘🏻🙏. It will help refresh the data sets. It will benefit other founders looking to raise and set the tone of hope and opportunity amongst the investor community. A rising tide will raise all boats!
  3. If you’ve seen any legit sources around the state of the VR developer ecosystem, DM me and I will update this post. Hopefully that will help new people looking to build for VR

On to the update.


For starters, this is what I’ve spent my time over for almost a year now. My first step was to understand the health of the ecosystem. There are plenty of examples about the consumer (Go Chesney!) and business (Accenture bought 60K Oculus) adoption of VR. There is also plenty of information out there around the platforms; Oculus (Quest2 1 yr anniversary), HTC (new headset), Varjo (rumored new headset), Magic Leap (raised $s) etc. So, I will skip stating the obvious here. But I couldn’t find any legit, credible information about the third leg of the stool; developers.

Sure, we know that a vibrant economy is developing around game developers.

Source: Blog post by the amazing Mike Verdu before Netflix stole him away. Also, one of the best execs & managers, and all around good humans around.

But what about founders building VR applications such as 3D creator tools, fitness, education, retail, commerce, productivity, collaboration, developer tools, media production tools (Video/Game/Music), space visualizations (e.g architecture, real estate), digital twins, Spaces, Metaverses? Did they raise money? How much runway do they have? How big are they?

I couldn’t find anything. So, over the last few months, I started talking to founders in the space and compiled some data on the state of the developer ecosystem. With this post, I wanted to share what I learned and the data set as best as I could compile (anonymized and aggregated) based on my 1–1 conversations and invite the community to add to this.

So, what’s the state of play?

A cohort of tech-first founders building VR Applications left in 2018

In 2014, after Oculus’ acquisition expectations soared. The resulting hype drew investors in and peaked in 2016–2017. The modest growth of headset sales reset expectations. Easy money dried up when investors realized that VR was not a guaranteed bet. As a result very few startups survived the trough of disillusionment, especially those that raised with only an 18 month planning horizon.

Hype cycle baby. I bet you Crypto and NFT will follow something like this as well. Which means if you can HODL for the next 5 years, you will likely make bank :-)

Take DreamOS, a VR collaboration app for example. Built by my friend Idan, they were pioneers! One of the smartest founders around, with a small team of 4, he built everything from scratch; C++ production code, a new graphics & physics engine, a modified version of webrtc for VR etc. But it wasn’t enough to raise a subsequent round as funding dried up. They aren’t an exception; With no path to a payoff or end in sight, the early believers left.

Grittiest founders survived 2018–2020 by optimizing for pilot $$s

The grittiest VR Founders went into survival mode for the next 24–36 months while device density increased. In a tight funding environment, founders fundraised with whatever stuck with investors. One approach that worked was to build things that sell pilots with business customers. As companies dabbled in VR, CTO offices, research divisions and digital innovation departments at corporations spent $50–100K to play with for proof of concepts (PoCs) and “innovation projects”. This helped innovation departments prioritize the new/shiny/fancy things that embellished their innovation narrative and fetch CXO customer testimonials for the startup. However some traction and pilot revenue in a tight fund-raising scenario is better than nothing. Thus this pilot money from businesses acted as a proxy metric for customer traction with investors.

But the tide is turning. Founders building VR applications are able to raise money again!

Over the last 9 months, things are starting to turn around. Founders are back in fund-raising mode to build great consumer grade VR applications. And the contrarian investors are starting to write checks again. I am not entirely sure yet on the causal link for this uptick. But I suspect it’s partly fueled by the reports of success from headset makers and VR game developers. It could also be correlated to the prospect of a virtual economy emerging w/ Crypto and NFT (also heading to peak hype cycle; that’s for another post!). And then of course, there’s the metaverse. But hey, we should take any wins we can that help VR founders!

Google trends for “Metaverse”

Over the 30 odd founders I spoke to this year, here is how the numbers shook out. I explicitly excluded Crypto, NFT, Metaverse applications from this because these can all exist independent of the VR/AR market. Plus, even those that are in VR, overlap heavily with gaming and entertainment. I will cover those in a future post.

Having scoped this down to just VR-first applications, remember this is JUST a fraction of all the VR founders building applications! Even assuming that I’ve spoken to 1% of the founders (which I don’t think I have), these numbers could be 100X in reality!.

At least 18 founders building VR Applications were raising a round in 2021 and felt good about their prospects based on conversations w/ their investors

Most of these companies have been through the trough of VR-winter and have survived. So, if you are an investor, you are looking at the toughest ones; the cockroaches.

Many of the teams have remained intentionally small and mostly kept the team’s tech-heavy. This is a good thing. Most of them have raised only seed rounds of pre-series A rounds. Survivorship plus small rounds plus eng-heavy teams means these teams are potential fertile grounds if you are an investor. Sure, these results are not stat-sig and suffer from survivor bias and availability bias.

If you are a founder in XR trying to raise a round and haven’t found much success with traditional VCs, don’t be disheartened. There has always been a mismatch between VC and frontier tech. This is because the vast majority of them only look at short-term MRR as if VR was as simple as web saas, even though it takes quite a while to build out the VR tech before developers can start charging. To make matters worse, VCs might even take advantage of your “lack of early MRR” to drive your valuation down and dilute the founding team. Luckily, accredited/institutional venture funding isn’t the only route. Non-accredited investors (e.g. crowdfunding) see the clear opportunity in plain sight (and they don’t have the blinders that “experienced VCs” have). This is precisely what Immersed did. Immersed allows you and your remote team to work together — in a virtual workplace in VR.

Immersed’s crowdfunding campaign on Wefunder

Immersed had originally raised $2M in Summer 2020. Based on that fact that their power users work 38+ hours in VR every week and having onboarded over 150K users in the last year since joining the Oculus Store, they launched a crowd funding campaign. Immersed raised $8M in 17 days in March 2021 on Wefunder. Crowdfunding really has the potential to set you free to focus on innovation!

Personally, I think the timing is great to buy into VR now because the asset class is undervalued. So if you are an investor and a founder approaches you to fund their VR application, think again. The tide might be turning and you don’t want to be caught out!

Thank you to Renji at ImmersedVR and Inga at ShapesXR who reviewed early drafts of this post



Anand Dass

Metaverse Content @Meta. Prev:Postmates. Co-Founder@Filestack, YC, MIT, McK. Builder, Scaler, Fixer, Father. Founders DM Qns Fn.Ln@Sloan.mit.edu. Here to help!