This presentation from last year argues that (1) the "hegemony of narrative" distracts attention from other opportunities in VR (now XR), which are (2) worlds, DIY tools and "corporate use" such as training and healthcare. Events since then have proven it to be largely true. "Narrative" (e.g., XR movies) are not a "wrong" investment, only a different one.

1. VR: WHY VCS CARE
AND WHAT TO DO ABOUT IT
WORLD VR FORUM 2017
JAMES C. ROBERTS III
GLOBALCAPITAL
GLOBAL CAPITAL STRATEGIC GROUP | GLOBAL CAPITAL LAW GROUP PC
VANGELIS LYMPOURIDIS, PHD
ENOSIS LLC

2. REVISIONS
Based on conversation during the World
VR Forum, I have included new slides
on VC and content.
Please also note that this presentation is only for
educational purposes. It is also copyrighted, 2017,
Global Capital Law Group PC. All rights reserved.

3. What’s in your mind’s eye?

4. Is it technology to . . .

5. tell a story . . .

6. in a digital world . . .

7. to be “consume” by one person/one
headset at a time
to one user at time?

8. That’s (pretty much) what most people say VR
is:
Storytelling in a cool environment.

9. Somewhat confining?
The hegemony of the narrative?

10. You’re not most people.
You see other uses.

11. Treatment

12. Training

13. Isn’t it still narrative?
You telling me a story . . .
Am I a viewer
or a participant?

14. VR for me to make
something (that works) or . . .

15. Tools for me to
make my own
worlds?

16. What Do VCs see?

17. All part of the VR ecosystem
An ecosystem

18. Create Distribute Consume
Stores Individual
Share Measure
Machinima Analytics
MMOGs e-sports
Display
H/W
Worlds
Content
VR/AR
Platforms
Market
places
VR
cinemas
WiFiCreation
H/W
Toolkits
DIY
Other
software
Cable/OTT
satellite
SaaS

19. Virtual cinema
VR Training
Display H/W enhancements
Display H/W
VR Analytics
Marketplaces
VR publishing
Platforms
VR movies
Creation H/W
VR/AR
Other VR titles
Toolkits
DIY Toolkits
Industrial Applications
Health VR
Enabling software

20. Where will they
invest?

21. (Almost) everywhere, as long as the VC feels that

22. value will increase by the next round

23. It’s about the delta in valuation.
Not (necessarily) revenue

24. 30x investment

25. It’s about bragging rights.
“Herd” behavior.
Competition for LPs.
Pre-existing bias.
Who knows whom.

26. VCs Like VR Because
B2B verticals for rapid growth
Growing B2C headset installed based
Major players are established tech companies
Their friends are in it, too or
The politics of VC funds

27. VCs Dislike VR because
●Potential multibillion fiascos
Oculus VR
Magic Leap
●High costs to consumer entry
●Technical limits
●Chicken-and-egg content problem

28. VC MODELS THAT CAN STILL WORK
Marketplaces/distribution platforms
Sharing
“Levi Strauss Theory of Making Money”
Tools and toolkit
Enhancements
Training/industrial uses
VR + AR + AI
User data/data mining
Making content

29. Don’t pan for gold
Sell the pans to pan for gold

30. CONTENT IS LAST ON THE LIST
BECAUSE . . .
Long history of bad experience
●Hit-driven business
●High production costs
●Long production cycles
●Insular communities (Hollywood)
●Stylistic obsolescence

31. ON THE OTHER HAND
Some VCs are investing in content:
• Maker Studios (Upfront Ventures)
• Studio Commitments to VR
• LA VC content funds (The
Congregation)
• Improbable Studios ($500m—
Softbank Ventures)

32. BE CAREFUL: VCS NOT REALLY
INVESTING IN “CONTENT?”
Most investments are in VR studios not in
titles
• The Improbable investment is in its
platform and its worlds:
Improbable [. . .] has developed a platform for
third parties to build vast virtual and simulated
worlds [. . . and will] double down on its product
and expand its ecosystem of developers.
(TechCrunch, May 11, 2017)

33. THE IMPROBABLE PLAY:
WEARING LEVIS
Improbable Studios is a combination of
• Marketplaces/distribution platforms
–Sharing
• “Levi Strauss Theory of Making
Money”
–Tools and toolkit
–Enhancements

34. TITLE INVESTMENT=TRADITIONAL
PROJECT FINANCING
Money for titles (e.g., a movie) less
likely from VCs (but not impossible)
• More likely to find that funding from
traditional studio project financing

35. CONTENT TO SELL HARDWARE
Remember:
• Dire Straits and the CD player?
• Porn and the VHS system?

36. MISSING THE PROSAIC FOR THE SIZZLE
VCs will like B2B verticals
(medical, rehab, training), but
● Long sales cycles
● Higher tech specs
● Cautious buyers
● Massive potential liability

37. COMPARATIVE SECTORAL 2020+
VALUES
$150
billion
$19 trillion
Virtual Reality Internet of Things

38. PITCH BASICS

39. What VCs Want
Teams & Expertise
Hot sector
Barriers to entry
Achievable Milestones
Fast traction (by metrics)

40. YOUR PITCH: ANSWERS TO . . .
What you do
Why it matters
Where you are
What are your next steps/milestones
(and why they matter)
How you will get there
Why your team
. . . Revenue model

41. Seek money by stage

42. Beware of Founderitis

43. Create Distribute Consume Share Measure
Display H/W Stores Individual Machinima Analytics
Worlds Platforms MMOGs VR e-sports
Content Marketplaces
Strategic
Content
VR/AR VR cinemas
Creation H/W WiFi
Toolkits Cable/OTT
DIY satellite
Other software SaaS
I like VR+AI

44. I also like platforms and worlds where
participants can build their own worlds or
explore—and share in—worlds created by
other participants. (½ of the Improbable
Model)

45. THANK YOU.
JAMES C. ROBERTS III
jcr@globalcaplaw.com
GLOBALCAPITAL
GLOBAL CAPITAL STRATEGIC GROUP | GLOBAL CAPITAL LAW GROUP PC
VANGELIS LYMPOURIDIS, PHD
vangelis@enosisvr.com
ENOSIS LLC