Varjo, a pioneer in building XR headsets and software for businesses, mines $40 million • TechCrunch

Apps in the metaverse often look more like a marketing gimmick than something a critical mass of consumers would use, let alone pay for. But turn to the business and there seems to be a very lucrative opportunity that is well on its way to finding traction. Today, one of the first players to create solutions for this market is announcing a round of funding to double that opportunity.

Varjo, which builds “professional-grade” virtual and augmented reality embedded hardware and software for industrial applications and other businesses, has raised $40 million, a Series D that it will use to both pursue R&D for its headsets, as well as delving further into software applications and tools for the Varjo Reality Cloud, its own streaming platform it launched earlier this year.

The company is headquartered in Helsinki, Finland – founded and run by longtime veterans of Nokia, which collapsed when that company, once a leading smartphone and mobile phone maker, went into a tailspin the past decade – and its backers in this round include a number of big investors outside the region.

They include EQT Ventures, Atomico, strategic backer Volvo Car Tech Fund, Lifeline Ventures and Tesi, the Finnish government’s venture capital and private equity fund; with the participation of new backers Mirabaud and Foxconn. Varjo describes the latter two as strategic: It’s unclear how the Swiss finance and banking giant works with Varjo, but Foxconn is a potential manufacturing partner for its devices, CEO Timo Toikkanen said in a statement. interview.

Varjo doesn’t disclose a valuation, but PitchBook data estimates his last round, $54 million in 2020, valued him at $146 million and Toikkanen (who ran all of Nokia’s mobile phone business before and after its acquisition by Microsoft) noted that the new assessment is “very positive”. While business has been strong for a while, investors believe a tipping point is approaching:

“Varjo is entering a new phase in scaling its high-immersion virtual and mixed reality products across enterprise verticals,” said Ted Persson, Partner at EQT Ventures and Board Member of EQT Ventures. Varjo administration, at TechCrunch. “It will be a game-changer for professionals, paving the way for a metaverse-like future that will transform work and collaboration.”

In a hardware landscape dominated by big tech companies – especially in VR hardware – Varjo is notable for being an indie player, who has garnered positive attention for his work, but also isn’t inclined to gobble up a lot of noise. money, often used to sink into marketing, to stay that way: it has only raised about $150 million since its inception in 2016. Toikkanen declined to say whether Varjo had been approached by others for the acquisition . Given his experience with Nokia – post-mortems have pointed to missteps due to his overconfidence as a category leader – I’d venture to say that he and others on the team understand firsthand the value of remaining a small company when it comes to innovation.

“We really like what we’re doing at this size,” he said. “There are great advantages to independence. We are moving fast and we have the ability to meet customer needs.

Perhaps the independence also gave the company a greater degree of focus. A number of XR players have focused on headsets and consumer applications, and some would say the quality of those efforts has been variable: Meta was downright ridiculed when Mark Zuckerberg previewed its expansion Horizon Worlds; but others are making efforts to improve the experience.

And there are also a number of companies that have put their money on the B2B opportunity (these include ByteDance owned build enterprise apps Meta, HP and Pico), although even in this area some like Spatial turned to other aspects of the “metaverse”.

On this spectrum, Varjo is one of those who took a position very early on that the first (and perhaps the main?) users of XR products would be enterprise customers, and he stuck to it.

“Consumer and business expectations of the metaverse are high overall. Meeting these expectations requires both 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”, together with the company’s XR-3, VR-3 and Aero products, enables fully virtual professional work in various sectors, at any time and in anywhere,” Keith Bonnici, chief investment officer at Tesi, said in a statement. “This then promotes global remote working, increasing efficiency and reducing CO emissions.2 emissions related to business travel.

In terms of products, Varjo is focused on producing high-end, business-critical services and devices (read: expensive, but for a less price-sensitive customer), and adopting a that virtual and augmented reality go hand in hand. in hand as mixed reality. Toikkanen believes foreknowledge has been integral to his success.

Picture credits: Varjo

“We were never a ‘hype’ company,” he said in his low-key Finnish clip. “We’ve been very consistent in saying that the entry point from the beginning is mixed reality. Eventually everything worked out to be built this way. We also said that the ultimate incarnation should be as good as real life. Pixelated holography would never be good enough.

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

Today it focuses 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 – in total about 25% of the Fortune 100, the company said – as well as “various departments across the United States and European governments”.

With founder Urho Konttori, another Nokia alum, on board as CTO of Varjo, the startup also holds 69 XR-related patents.

“Varjo is very focused on protecting intellectual property,” Toikkanen said, noting that the company has been approached by other tech companies to license that intellectual property, but has yet to developed this activity. “Today, the focus is on integrating it into our own products and services. This is how you can get access.