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Believe it or not, virtual reality is not a new technology. It was actually invented way back in the 50s but didn’t hit the mainstream until the 80s and 90s when video game developers started implementing it into their games. But even then, the industry didn’t catch fire like many thought it would.
It wasn’t until the last decade or so that the industry really took off. Today, VR technologies are big business.
The global market is currently valued at ~$28B, up from $21.83 billion in 2021. The recent growth has not only drawn the attention of VCs and private equity but also Main Street investors who are looking to profit from the boom.
In this article, we will explain what virtual reality is, how it works, how it’s used, and how to invest in VR technology.
What is virtual reality, and how does it work?
Virtual reality, or VR for short, is a technology that uses special sensors and cameras to create digital environments that can be experienced in real-time.
These virtual environments are designed to be as immersive and engaging as possible, often incorporating sound and touch feedback in addition to visuals.
To use VR technology, a user typically wears a headset equipped with sensors and screens that wrap around their field of vision. By tracking the user's movements in real time, the technology creates an experience that is completely integrated with the user's viewpoint and surroundings.
Some of the most common uses for VR technology include gaming, entertainment, education, and training simulations.
Because VR allows users to actually experience something rather than simply viewing it from afar, it has become increasingly popular among these industries as a way to engage and captivate users in new and exciting ways.
Whether you're whizzing through space in a futuristic spaceship or exploring exotic landscapes on another planet, virtual reality offers an experience that is unparalleled by any other technology out there today.
Virtual reality use cases (outside of gaming)
VR has utilities that transcend entertainment.
Education
One use case is in the field of education. For example, virtual environments can be used to create immersive learning experiences that allow students to explore complex topics from a first-person perspective, offering a deeper understanding of concepts such as chemistry or physics.
Additionally, these technologies can be used to create simulations for skills training, providing learners with a safe space to make mistakes and hone their techniques.
Exposure therapy
Outside of the classroom, virtual reality has also been used for treating conditions such as post-traumatic stress disorder (“PTSD”).
In exposure therapy, patients are gradually exposed to the stimuli that trigger their PTSD in a controlled environment, where they can confront their fears without real-world consequences. This treatment has been found to be effective in reducing symptoms and helping patients lead more normal lives.
Other potential applications of virtual reality include entertainment, architecture, engineering, and healthcare.
For example, theme parks now offer VR rides that transport guests into other worlds, architects use VR to create realistic previews of their buildings for clients, and surgeons are training with virtual reality operating systems to perform complex procedures.
Overall, VR has the potential to revolutionize many different industries and become a central part of our daily lives.
Is VR a good investment?
We’re not in the business of advising, so we’re not going to tell you about the “best VR investments to buy in 2022.” However, if you are asking yourself, “should I invest in virtual reality?” there are a number of compelling reasons to consider putting your money into the space:
The increasing affordability of virtual reality devices. Over the past decade, prices for virtual reality headsets have dropped significantly as more companies have entered the market. This trend is expected to continue, making VR devices more accessible to businesses and consumers alike.
The growing popularity of VR gaming. According to a report by Grand View Research, the global VR market is expected to increase at a compound annual growth rate (“CAGR”) of 15% from 2022 to 2030. This increase in demand signals that consumers are increasingly interested in these immersive experiences and will drive investment from gaming companies and other businesses.
The rise of enterprise applications for VR. As more businesses recognize the potential benefits of VR technology, there is increased demand for solutions that can be used to improve productivity, increase collaboration, and enhance employee training and education.
The improving quality of virtual reality hardware and software. Over the last few years, we have seen several advancements in VR technology, including improved resolution, faster processing speeds, and better tracking capabilities. These advances will continue to fuel investment as businesses look for new ways to take advantage of these immersive experiences.
How to invest in virtual reality
The public approach
Not long ago, it was pretty hard to find virtual reality investment opportunities. However, the industry has grown considerably over the years, and more and more virtual reality companies are starting to sell their stock on the open market.
Recently, the gaming industry has been the driving force behind the industry. And while there aren’t many “pure-play” stocks to invest in, plenty of publicly-traded tech companies have been pouring large sums of capital into the growing sector. As a result, these are the companies that people are investing in the most.
Take Meta, for example. The company, formerly known as Facebook, created a whole new branding campaign centered around its move into the Metaverse—a virtual world where people can shop, play, work, and even mingle.
CEO Mark Zuckerberg and Co. went big in the virtual reality space, spending $10B thus far on the technology that powers their Oculus Quest VR platform (including acquisitions).
While virtual reality is just a piece of Meta’s business, it’s a pretty large one, so it’s safe to say that investing in their stock is one way to invest in the sector.
Not to be left out are the other major players in the VR game like Sony, Microsoft, Apple, Alphabet (Google), and many more. The fact that these juggernauts are inundating the industry with fresh capital could signify this space is a long-term growth play.
The private approach
Investing in VR startups can be a great way to gain exposure to this rapidly growing and exciting new technology.
As previously stated, several industries outside of the gaming sector are now using VR in new and exciting ways. As you can see in the chart below, aerospace and defense, healthcare, and the commercial industries are utilizing VR in a myriad of applications.
We frequently have virtual reality and augmented reality startups raising on our platform. If you’re interested in checking out our live offerings, click here.
Three things to consider when investing in virtual reality companies
Technology maturity. More mature technologies tend to be less risky, while newer technologies come with a higher degree of risk. But, they also offer the potential for greater rewards if things go well.
Competition. With any new technology, you can expect that there will be competition from other companies that want to get a piece of the market share. Keep an eye on how competitive the market is for these technologies and which companies seem most likely to succeed in this area.
Use case. How will these technologies be used by consumers, businesses, or other companies? This can help you assess how successful a company may be in this area.
If you are looking to invest in virtual reality companies, there are several things that you should consider. These include the maturity of the technology, level of competition in the market, and potential use cases for these new technologies.
Ultimately, choosing the right investment will depend on your individual investing goals and risk tolerance. However, with careful research and thoughtful consideration, you can find virtual reality companies that offer the right mix of potential returns and risk for your investing needs.
Keep an eye out for more VR startup opportunities on Republic in the future.
The content herein is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
