Two of Europe’s most experienced seed investors held a first close of €16.5m of a new fund, FOV Ventures, in March. The target is a final close of €25m.
Dave Haynes, a Briton, previously headed up HTC’s $100m Vive X fund, which invested in tech across the EMEA region. Petri Rajahalme, a Finn, led eight investments into extended reality (XR) start-ups for Nordic XR Startups. Rajahalme’s track record included the exit of augmented reality (AR) cloud business Immersal.
The new firm (FOV stands for ‘field of view’) will focus its first fund exclusively on investing in the ‘metaverse’ – an umbrella term used to describe a three-dimensional version of internet and related immersive technologies.
The VC has already secured backing from three institutional investors and a group of family offices, high-net-worth individuals and company founders who have themselves built and exited technology companies.
“Petri and I met a couple of years ago. We were both investing in the XR space and got to know each other as we were tracking the same themes and attending the same events,” says Haynes. “We could see first-hand how XR and the concept of the metaverse was developing and we saw the opportunity to team up.”
Haynes sees the metaverse as still a nascent concept, but nevertheless one with the potential to develop into a $1trn industry that will see the formation of a new generation of unicorn companies.
“The metaverse can be hard to define, but we see it simply as an expansion and successor state to today’s internet. The web started out with the transfer of documents and files and then developed into a mostly 2D experience on screens, websites and then mobile applications,” he explains.
“The metaverse will see the web become more immersive, with more real-time 3D software and virtual worlds, as well as a convergence between the physical and digital.”
The metaverse may seem somewhat nebulous, but it is more established than many people realise. Games such as Fortnite and Roblox are hugely popular virtual reality (VR) entertainment. The likes of Microsoft, NVIDIA, Google, Amazon and Meta (previously Facebook) have each outlined metaverse strategies in their recent earnings announcements.
“When a company like Facebook renames itself because it wants to be seen as a metaverse company rather than just a social media business, it’s obvious that the metaverse is moving firmly into the mainstream,” argues Haynes.
FOV Ventures will initially back about 25 deals, writing cheques of up to €500,000 for European (including UK) pre-seed and seed stage businesses. Europe’s metaverse community has not received the same levels of attention and investment as the US.
“There’s a huge talent pool of software engineers and gaming developers across Europe, especially in Finland and the UK where Petri and I are based. In Finland, you have all the experience coming out of Nokia and the emergence of gaming companies such as Supercell and Rovio, which developed Angry Birds, while in the UK you have the experience of founders and investors who have built up some very big businesses. And we see similar talent pools in other European countries, such as France, Estonia and Switzerland.”
In May 2021, for instance, Snap Inc (the company behind Snapchat) paid $500m to acquire UK-based augmented reality displays maker WaveOptics in its largest ever acquisition. Another UK metaverse start-up, XYZ Reality, which has built an AR tool that uses holograms on construction sites, secured a $20m Series A funding round a month later.
Haynes is a member of the access to finance working group, which is chaired by Shaun Beaney who was previously a member of the Corporate Finance Faculty and is part of the Immerse UK network. The working group has been tracking a lot of the new investment activity. “That showed how far the market has come and how fast it’s developing,” says Haynes.
Immerse UK
What some call the ‘metaverse’ – a word coined by Neal Stephenson in his 1992 sci-fi novel Snow Crash – is also often described as ‘immersive’ or as ‘XR’ (extended reality); together these encompass virtual reality, augmented reality and related technologies.
Immerse UK, led by Asha Easton (pictured left), is a thriving network of entrepreneurs, technologists, creatives, companies, research institutions and government agencies that is playing a big role in promoting innovation. Shaun Beaney (also left) from the Corporate Finance Faculty has chaired the network’s ‘access to finance’ working group since Immerse UK was founded in 2017.
“The emergence of specialist investors such as FOV Ventures is a natural next step in the growth of immersive,” says Beaney. “It’s very good news. There have been hype cycles before, but what we’re seeing now is more sustained and thoroughgoing.”
In May 2021, Easton, Beaney and Dave Haynes, founder of FOV Ventures, co-authored the UK Immersive Tech: VC Investment Report, which featured 31 highly entrepreneurial ventures across the UK and across engineering, medicine, architecture, real estate and the creative industries.
Easton explains: “The UK’s immersive technology space is incredibly strong. There are excellent state-backed funding programmes and experienced innovation agencies in place, as well as strong links between academics, entrepreneurs and corporates.”
Easton says that despite the UK’s strong knowledge base and recent success stories, there is still much to be done to harness the full potential.
“XR and the metaverse is such a nascent industry and there’s still a huge amount of work to be done to educate investors about the opportunity. With Facebook renaming itself Meta and all the global tech companies talking about the metaverse, XR has really become part of the public conversation. That’s helped so many companies and their capital-raisings, but at the same time, a
ll the hype has also been overwhelming for investors and institutions.”
Easton says that one of Immerse UK’s key priorities now is to build on the interest in the metaverse that has been generated by Facebook and others by connecting investors with people across the industry, highlighting significant growth opportunities.
“There can be an assumption that the metaverse is only important in the creative industries. But the fact of the matter is that it’s going to transform all industries. There’s still a lot of technology and infrastructure that will have to be developed to get us where we need to go. Our role is to explain how that will evolve – and connect people to accelerate and scale that capability.”