The current state of wearable tech is lukewarm given high hopes for the industry in 2014. Estimates for 17 million wearables shipped worldwide that year came up well short.
Investors took notice, too, as they spent $370 million USD in 2015 versus $1 billion USD in 2014.
The downturn may just be a temporary sputtering, however, as wearable sales for products like Magic Leap have boosted the market coming into Q4 2016.
According to data from CB Insights, investors have sunk $1.45 billion into wearable tech in the first three financial quarters of 2016. Already higher than the 2014 figure, 2016 investment still has another month and a half to go. CB Insights projects a total of $1.9 billion USD for 2016.
“Early this year, Magic Leap raised $793.5 million, a huge chunk of funding for the entire year.”
Wearable Tech Investment vs. Deals
Despite the 344 percent funding increase from 2015 to 2016, the number of deals is unlikely to show the same level of increase. Ninety-one deals went through in 2015. So far this year, 70 wearable tech deals have been made. Projections say Q4 will bring 2016’s total up to 92 deals for the year. Comparatively, that’s seven fewer deals than in 2014.
2016 also marks a significant growth of the average size of the deal. The average deal this year was $16 million, compared to $11.2 million USD in 2014 and $5 million USD in 2015
The Champion of Wearable Tech, Magic Leap
Despite more funding, the lower number of deals this year compared to 2015 is interesting. The source of the discrepancy is likely Magic Leap.
Magic Leap is a secretive company working on what it calls cinematic-reality technology. With that, Magic Leap is trying to link the virtual world with reality. With its headset, for instance, a user could interact with a virtual monster in a real alleyway.
Magic Leap’s innovative approach to virtual reality has not escaped the attention of funders. Early this year, Magic Leap raised $793.5 million, a huge chunk of funding for the entire year. This move itself can explain the increase in funding despite a lower number of wearable tech deals.
Other than Magic Leap, a few businesses that have raised significant amounts for wearable tech include Jawbone, Thalmic Labs, Razer, and Chrono Therapeutics, which have raised $165 million, $120 million, $75 million, and $47.6 million respectively in 2016.