Varjo, a frontrunner in building enterprise XR headsets and software, raises $40 million • TechCrunch

Applications in the metaverse often feel more like a marketing gimmick than something a critical mass of consumers would use, let alone pay for. But turn to the venture, and there seems to be a very lucrative opportunity that is far in finding traction. Today, one of the early movers in building solutions for that market is announcing a funding round to double the odds.

Varjo, which builds hardware and integrated software for “professional” virtual and augmented reality for industrial and other business applications, has raised $40 million, a Series D that it will use to both continue R&D for its headsets, as well as advance in software applications. and tools for the Varjo Reality Cloud, the proprietary streaming platform it launched earlier this year.

The company is headquartered in Helsinki, Finland — founded and run by longtime Nokia veterans who fell apart when that company, once a leading smartphone and mobile phone manufacturer, spiraled into a tailspin over the past decade — and its backers in this round are a number of major investors from the region.

They include EQT Ventures, Atomico, strategic financier Volvo Car Tech Fund, Lifeline Ventures and Tesi, the Finnish government’s VC and PE fund; with new donors Mirabaud and Foxconn also participating. Varjo describes the latter two as strategic: It’s not clear how the Swiss financial and banking giant is working with Varjo, but Foxconn is being tapped to help manufacture its devices, CEO Timo Toikkanen said in an interview.

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Varjo will not disclose a valuation, but data from PitchBook estimates the price was valued at $146 million in the latest round in 2020, and Toikkanen (who used to run all of Nokia’s mobile phones before and after Microsoft’s acquisition) noted that the new rating “very positive.”

In a hardware landscape dominated by major tech companies — particularly in VR hardware — Varjo stands out as an independent player, not one who tends to gobble up a lot of money to stay that way: it’s only raised about $150 million. since its inception in 2016. Toikkanen declined to say whether Varjo has been approached by others for acquisition, but given that Nokia background, I’d venture to say that he and others on the team understand first-hand how valuable it is to have a to remain a smaller company when it comes to innovation.

“We love what we’re doing at this size,” he said. “Independence has great advantages. We are moving quickly and we can respond to customer needs.”

Perhaps the independence has also given the company more focus. A number of XR players have focused on consumer headsets and applications, and some argue that the quality of those efforts has been variable: Meta was outright ridiculed when Mark Zuckerberg previewed his Horizon Worlds expansion; but others do their best to improve the experience.

And there are also a number of companies that have also put their money into the B2B opportunity (they include Meta building business applications, HP and Pico, owned by ByteDance), although even in that area some, like Spatial, have moved on to other aspects. of the ‘metaverse’.

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Within that spectrum, Varjo is among those who early on took the view that the first users (and perhaps the most important?) of XR products would be business customers, and it has stuck to that.

“The expectations of consumers and companies regarding metaverse are high worldwide. Meeting these expectations requires easy-to-use and accurate technology as well as high-quality software and content. Varjo’s technology – namely the new XR streaming platform ‘Varjo Reality Cloud’ combined with the company’s XR-3, VR-3 and Aero products – enables professional, fully virtual work across industries, anytime, anywhere” Keith Bonnici, investment director at Tesi, said in a statement. “This then promotes remote working globally, increases efficiency and reduces carbon emissions from work travel.”

In terms of products, Varjo’s focus is on producing high-quality, mission-critical services and devices (read: expensive, but for a customer who is less price sensitive), and to take an approach where virtual and augmented reality hand-held. in hand as mixed reality. Toikkanen believes that foresight has been integral to its success.

“We’ve never been a ‘hype’ company,” he said in his understated Finnish clip. “We’ve been very consistent in saying that the starting point is mixed reality from the start. In the end everything worked out to be built like this. We also said that the ultimate incarnation should be just as good as real life. Pixelated holographic would never be good enough.”

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The company currently makes three different headsets – the XR-3, the VR-3 and the Aero, ranging in prices from about $6,500 to $1,500 respectively with additional costs for software subscriptions to use them (which seem to start at about $1,500 per year), as well as separate development environments for its Reality Cloud and another next-generation product called Teleport, which is still in alpha.

Its focus today is on applications in areas such as design and manufacturing, engineering, education and healthcare, and in addition to Volvo, its customers include Lockheed Martin, Boeing, Aston Martin, Kia — totaling about 25% of the Fortune 100, the company said — as well as “various branches in the United States and European governments.”

With found Urho Konttori, another Nokia alum, on board as Varjo’s CTO, the startup also owns seven patent families related to XR.

“Varjo is very focused on protecting intellectual property,” Toikkanen said, noting that the company has been approached by other tech companies to license that IP, but has yet to develop that company. “Today, the focus is on incorporating it into our own products and services. That way you can gain access.”

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