Extended reality

The real world faces a fierce new competitor

Last updated: 3 Aug 2023

Market 101

The hype’s died down, but it hasn’t gone away. Take a look at dozens of innovations in 3D modelling, training, gaming, maintenance and medtech and you’ll spot digitally immersive — or “extended reality” (XR) — tech gradually entering our lives. This broad sector — which includes the metaverse, virtual (VR), augmented (AR) and mixed reality tech — has been landing bigger and bigger cheques lately, with funding crossing $1bn globally for the first time in 2021 and rising to $1.5bn in 2022.

Critics will say that this is eerily similar to 2017’s short-lived VR/AR funding boom — back when Pokemon Go’s summer of captured hearts and Pikachus convinced investors that the game’s tech was about to take over the world — but allow us to explain why this time it’s different.

The European XR market is relatively small — roughly 1,500 companies — but growing in clout. Growth in the sector post-2017 has been like a sloth on rollerskates — slow and steady to begin with, but speeding up of late — with a renewed focus on product development bringing efficiencies to a wide range of use cases.

The tech is still too pricey for the mass market — the cutting edge is Apple’s new VR headset, due next year at a wallet-busting $3,499 — but XR is increasingly palatable for business customers. Whether it’s Helsinki-based Varjo’s VR headsets for training astronauts and pilots or London-based XYZ Reality’s AR tech to let construction workers visualise buildings, saving them time and money, XR use cases are attracting cash and eyeballs.

Moreover, recent growth has been driven by late-stage funding, which shows that investors are no longer swayed by untested promises and want to see paying customers. The truckloads of cash we saw for metaverse projects in 2021 and 2022 are no more but Meta’s $40m acquisition of London’s AR app-maker Scape Technologies in 2020 and Snap’s $500m acquisition of another UK AR company, WaveOptics, in 2021 offer further proof that XR cannot be ignored.

Early stage market map

Key facts

31.5%

predicted CAGR during 2022-20301

$120.2bn

value of European metaverse by 20302

860k

new jobs expected to be directly created in XR by 20253

Startups tracked by Sifted

Sifted take

With XR, it really is a matter of perspective. But it feels like the truly immersive virtual experience hasn’t fully arrived: no one is clicking into the metaverse and mistaking it for a fantastical world. And yet, from gaming to training, medtech to edtech, XR is making strides. Surgeons are using the tech to figure out where to cut and stitch; astronauts are using VR to practise docking with the International Space Station. Dollar bills may not be landing at quite the pace European XR startups would have hoped for, but some eye-catching exits, and the continent’s obsession with being the creator of Web4, are sources of inspiration for early-stage startups. And let’s not forget: the world’s tech giants, including Meta and Apple, both worth trillions of dollars, are betting on XR tech as the next big thing after smartphones, apps and personal computers. Their spending will help this quirky industry move in from the periphery.

Rising stars

Condense Reality

3D Modeling and Virtual Experiences

Total funding

€5m

Bristol, UK
2019

Startup has developed the tech to capture and live-stream real-world content into virtual spaces.Backed by two of the UK's most active early-stage investment firms, SFC Capital and LocalGlobe.

Round

Seed

Valuation

Undisclosed


Date

2022

Size

€400k

Sloyd

3D Modeling and Virtual Experiences

Total funding

€2,1m

Oslo, Norway
2021

3D modelling platform aims to make the process of creating realistic 3D virtual assets for the metaverse easier. Avi Latner (CEO) joined the Antler accelerator program in Oslo, where he met Ovind Soroi (CTO) and Andreas Edsberg (CEO). Today, Sloyd is taking part in acceleration program, Speedrun, guided by A16Z (Andreessen Horowitz).

Round

Seed

Valuation

Undisclosed


Date

2023

Size

€1,3m

Anything World

3D Modeling and Virtual Experiences

Total funding

€9m

London, UK
2019

Creative platform that enables brands and retailers to produce 3D and AR experiences on-demand, powered by a talent cloud.

Round

Seed

Valuation

Undisclosed


Date

2020

Size

€2,1m

Poplar Studio

Augmented Reality Solutions for Retail and Marketing

Total funding

€3m

London, UK
2018

Creative platform that enables brands and retailers to produce 3D and AR experiences on-demand, powered by a talent cloud.

Round

Seed

Valuation

Undisclosed


Date

2020

Size

€2,1m

Early stage startups to watch

Aerinx

Budapest, Hungary
2018
Seed

2.5m

2m

30m

Alpha3D (previously AlphaAR)

Tallinn, Estonia
2018
Pre-seed

1.3m

700k

-

AlterEyes

Hasselt, Belgium
2019
Seed

300k

300k

-

Anything World

London, United Kingdom
2019
Seed

9m

6.5m

30m

Apprendly

Asker, Norway
2019
Angel

960k

300k

-

Aryel

Milan, Milan
2020
Seed

3.7m

3.7m

-

AUCTA

Berlin, Germany
2019
Pre-seed

1.1m

450k

-

AVATAR MEDICAL

Paris, France
2020
Pre-seed

6.5m

2.5m

-

Basemark Oy

Helsinki, Finland
2015
Series A

15m

7.5m

-

Be Your Best

Oslo, Norway
2018
Seed

3m

1.7m

-

bem.builders

Paris, France
2021
Pre-seed

2m

2m

-

Bodyswaps

London, United Kingdom
2019
Seed

2.2m

1.5m

-

Challau

London, United Kingdom
2020
Pre-seed

620k

620k

-

Changingday

Glasgow, Scotland
2020
Series A

1.6m

475k

4.2m

cityscaper GmbH

Berlin, Germany
2021
Bootstrapped

500k

230k

-

Condense Reality

Bristol, United Kingdom
2019
Seed

5m

400k

-

CREAL

Lausanne, Switzerland
2017
Series A

18m

10.8m

-

Didimo

Matosinhos, Portugal
2016
Series A

15.2m

7.3m

-

Dreamwaves

Vienna, Austria
2019
Seed

1.1m

160k

5m

Dropslab Technologies

Luxembourg, Luxembourg
2020
Seed

100k

100k

-

FAR

Middlesbrough, United Kingdom
2021
Angel

290k

290k

-

Glartek

Leiria, Portugal
2017
Seed

1.5m

1.5m

-

Hadean

London, United Kingdom
2015
Series A

50m

30m

-

Kinetix

Paris, France
2022
Seed

10.5m

10.5m

-

KIT-AR

London, United Kingdom
2018
Seed

3.3m

2m

-

Loci

London, United Kingdom
2021
Seed

5.3m

4.7m

-

Ludenso

Oslo, Norway
2021
Seed

1m

910k

-

Medical Realities

London, United Kingdom
2015
Seed

2m

1.5m

-

MOOVD

Nijverdal, Nederland
2020
Seed

1.2m

1m

-

Naer (previously Cohere XR)

Oslo, Norway
2021
Pre-seed

550k

550k

-

NonNocere

Berlin, Deutschland
2020
Seed

430k

430k

10.1m

NXRT

Wien, Austria
2019
Seed

2.4m

1.6m

-

Ocean Visioneering

Aalesund, Norway
2020
Seed

2k

440k

280k

Odyssey

GRONINGEN, Nederland
2016
Seed

4.8m

4.8m

-

OneBonsai

Leuven, Belgium
2017
Angel

300k

300k

-

Ordinary Objects

Oslo, Norway
2023
Pre-seed

1.3m

880k

-

Pharrowtech

Leuven, Belgium
2019
Series A

24m

15m

-

Poplar Studio

London, United Kingdom
2018
Seed

3m

2.1m

-

Radiobotics

Copenhagen, Denmark
2017
Seed

8m

2m

-

RD Land

London, United Kingdom
2021
Seed

700k

3m

-

rooom

Jena, Germany
2016
Seed

12.5m

6.5m

-

Second Winery LTD

London, United Kingdom
2022
Angel

200k

100k

5m

SideQuest

Remote, United Kingdom
2019
Series A

15.7m

12m

56m

Simli

Oslo, Norway
2023
Seed

2.5m

1.1m

-

Sloyd

Oslo, Norway
2021
Seed

2.1m

1.3m

-

Somnium Space

Prague, Czech Republic
2017
Seed

1.2m

1m

-

SPREE Interactive GmbH

Nürnberg, Deutschland
2017
Debt

8m

3m

-

Sympatient

Hamburg, Germany
2017
Series A

9.1m

7.5m

-

Toteemi

Pozuelo de Alarcón, Spain
2019
Pre-seed

2.5m

2.5m

-

Valkyrie Industries Ltd

London, United Kingdom
2017
Seed

1.9m

890k

-

Virtex

London, United Kingdom
2020
Angel

4.7m

2.9m

-

VividQ

Cambridge, United Kingdom
2017
Seed

21m

13.2m

-

VRAI

Dublin, Ireland
2017
Seed

3m

1.2m

-

Warpin

Stockhol, Sweden
2016
Angel

2.1m

600k

-

WEARFITS

Kraków, Poland
2019
Pre-seed

240k

240k

-

Wisear

Paris, France
2019
Angel

2m

2m

-

wondder

Berlin, Germany
2020
Pre-seed

625k

500k

-

XR Games

Leeds, United Kingdom
2017
Series A

13.1m

7.1m

-

XYZ Reality

London, United Kingdom
2017
Series A

43m

24.6m

-

Europe’s success stories

Who early stage startups are up against

(Pre-)Seed

SeriesA

SeriesB

SeriesC

SeriesD+

IPO/Exit

London's Scape Technologies, a computer vision startup focusing on surpassing GPS location accuracy, has been acquired by Meta for an undisclosed amount. Scape was backed by Entrepreneur First (EF), where it was an alumni of their startup program, as well as LocalGlobe, Mosaic Ventures, and Fly Ventures.

(Pre-)Seed

SeriesA

SeriesB

SeriesC

SeriesD+

IPO/Exit

MindMaze is a global leader in brain technology and digital neurotherapeutic solutions for brain health and recovery. With a presence in over 15 countries, its mission is to accelerate the brain’s ability to recover, learn and adapt. The merger between Babylon Health and MindMaze, announced in June 2023, lead to Babylon's de-listing from the New York Stock Exchange, resulting in the removal of existing shareholders. In 2022, MindMaze, with the support of Hollywood actor Leonardo DiCaprio, successfully raised $105m in a round led by Concord Health Partners, alongside AlbaCore Capital Group and Hambro Perks.

(Pre-)Seed

SeriesA

SeriesB

SeriesC

SeriesD+

IPO/Exit

London-based Gravity Sketch has built a cross-platform tool which enables teams to think and create in 3D, while collaborating in real-time. A 3D tool revolutionising the design process for companies including Adidas, Nissan, Volkswagen, Ford and Reebok has been backed by a leading Silicon Valley VC.

Your feedback

How would you rate this briefing?

1
2
3
4
5