Spatial raises $14M more for a holographic 3D workspace app, a VR/AR version of Zoom or Hangouts
Ingrid Lunden, January 30, 2020

The worlds of virtual and augmented reality have yet to land on the applications and hardware to truly spark mass-market, consumer interest in the space, but in the meantime, a startup building mixed reality services for business users has raised a round of funding, underscoring the opportunity in enterprise.

Spatial, which has developed a “holographic” collaboration platform that people use to speak and work together in virtual rooms through the use of strikingly effective avatars — think of a supercharged, virtual reality version of Zoom or a Google Hangout — is today announcing that it has raised $14 million, a Series A that it will be using to continue building out the functionality of its application and its interoperability with a wider range of hardware, as well as to start looking at how it can turn its tech into a platform that could be used by others, for example by way of an SDK.

The funding is being led by White Star Capital, iNovia and Kakao Ventures, with participation from Baidu and individual investors, Instagram cofounder Mike Krieger and Zynga’s Mark Pincus, also participating. Together with Spatial’s last round, $8 million in October 2018, the company has now raised $22 million. It’s not disclosing valuation at this stage, Anand Agarawala, the CEO who co-founded the company with Jinha Lee (CPO), said in an interview.

Other investors include Expa, Lerer Hippeau, Leaders Fund, Samsung NEXT and Andy Hertzfeld (of Macintosh fame).

Spatial’s funding comes at a time when VR and AR startups have certainly seen their share of funding (Magic Leap alone has raised over $3 billion), high valuations, some extremely notable exits, and definitely the release of a number of head sets and apps — but at the end of the day, it’s estimated that there were only 6 million VR headsets sold last year, speaking to how the space has remained niche at best.

Niche in consumer, however, can speak to major opportunity in enterprise, and that is where Spatial is operating, with technology that it has built to be interoperable with any headset or AR glasses — currently including Microsoft HoloLens, Oculus Quest, Magic Leap One, Qualcomm XR2 or an Android/iPhone mobile device — or even a basic PC, if that’s all a person has to use, to let companies build out what might best be described as videoconferencing on steroids: placing people into virtual rooms where they can speak to each other, or look at and manipulate holographic models together, and more.

Spatial itself has seen its business take off in the last year, Agarawala said, with inbound interest from 25% of the Fortune 1,000 bracket of businesses, and its first publicly-named customers, which include very non-tech names like Mattel, Purina/Nestle and BNP Paribas. That in itself is also a sign of how immersive, three-dimensional media is possibly, finally approaching a breakout moment.

That will also be buffered by a raft of new hardware, Agarawala said. He declined to say which companies are likely to roll out new devices but as a developer of key services that spur purchasing, Spatial gets a heads-up (no pun intended) on what is coming around the corner, and Agarawala said the picture is bright and that we might finally be exiting what he described as a “VR winter”.

“It feels like the industry is accelerating this year,” he said. “The industry is firing up 5G and that will also be a big push.” He also pointed out the development over at Amazon, where last month the company announced AWS Wavelength for ultra-low latency 5G computing at the edge, something that will have a direct impact on using and building the next generation of AR and VR headgear.

Given its position with developers, if Amazon is getting into the mix, you know something is up, he added.

The idea of taking what Spatial has built to produce its own applications for customers, and turning that into a platform that others could use, too, is something that the company had always planned to do — platforms are front and centre in Agarawala’s mind, given his pedigree of years working at Google, which acquired his previous startup, BumpTop, in 2010. But that too appears to be getting bumped up, so to speak, because of the positive outlook. 

“We have always wanted to open up our platform to let others build applications on our framework, using our avatars, leveraging our cross-platform nature, finding new applications for our hand gestures,” Agarawala said. “We wanted to open that up, but we thought that it would be years out before we did, since it doesn’t make sense for an AR/VR platform to do something like that until there is actual market demand. But there has been so much heat that we might consider doing it this year.”

Krieger’s interest in Spatial comes in the context of him investing in a number of other work-focused collaboration platforms, including Loom, Figma, and Pitch, and that’s key to what makes Spatial interesting: it’s not just tapping the VR/AR space but another very interesting area that has seen a lot of growth with the rapid rise of products like Slack, and will continue to evolve.

“Spatial’s mixed-reality solution will be a key part of the future of work,” said Krieger in a statement. “They’re taking us beyond everyday tools like Zoom and Slack and pointing the way towards what conferencing and collaboration can be like if they were invented today and I’m excited to support the journey.”

To see more on how it works, here’s a little video I did with Spatial earlier this month during CES.


- Originally published at Jan 30, 2020.