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A few years ago, virtual reality was all the rage in Hollywood, helping to fuel the rise of Silicon Beach with the promise of reinventing the entertainment business.
At its peak, investors pumped $253 million into two dozen deals involving virtual and augmented reality start-ups in L.A. and Orange counties in 2016, hoping that pricey headsets projecting virtual worlds would become as popular as smartphones. But investment in the technology has slowed dramatically in recent years, and what seemed like a promising boom has largely fizzled.
California - Companies - Millions - Dollars - Dozens
Several California companies that raised millions of dollars have shut down or have laid off dozens of workers, as businesses scrambled to readjust their strategies in the face of lackluster consumer demand for VR headsets and a drought of capital.
"It's just been a drawn-out hype cycle that's promised to be the next big thing for so long," said Nicholas Pappageorge, a senior intelligence analyst at CB Insights. "The investor's patience for the industry has worn thin."
Investment - Reality - Start-ups - LA - Orange
Investment in seven augmented and virtual reality start-ups in L.A. and Orange counties plummeted 81 percent last year to $24.7 million compared to 2017. That's just 10 percent of what venture capitalists poured into the local sector in 2016, according to the PwC/CB Insights MoneyTree Report, which tracks investment in virtual and augmented reality. Nationally, funding for augmented and virtual start-ups fell 46 percent to $809.9 million last year compared to 2017, according to the report.
The local decline in VR and AR investment is notable because it occurred at a time when overall venture capital funding in the two counties increased 36 percent to nearly $6.4 billion last year, the report said. Investors parked their money in other areas such as cybersecurity and artificial intelligence.
Decline - Investors - Money - Industry
Why the precipitous decline? Many investors have been skittish about pouring more money into an industry that...
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