By Benny Evangelista San Francisco Chronicle.
With the virtual and augmented reality markets projected to take off in the next five years, a San Francisco venture capital firm has created a $10 million fund to invest in startups focusing on those emerging technologies.
Presence Capital announced its long-term plans Thursday, but it has already made stealth investments in three companies, including Baobab Studios, a virtual reality animation startup that landed a $6 million round led by Comcast Ventures last week.
Presence Capital co-founder and managing partner Amitt Mahajan believes his fund's narrow focus on virtual and augmented reality won't end up with the same results as the Glass Collective, which invested in startups building software and hardware for the now-dormant Google Glass.
"Obviously, they were off the mark a little bit," Mahajan said in an interview. "All of us strongly believe virtual reality and augmented reality are going to be the primary computing platforms that will eventually supplant mobile."
There are hundreds of companies betting on the future of virtual reality, which creates an experience inside a computer- or video-generated virtual world, and augmented reality, which adds a layer of virtual reality to real-life situations.
"We do think it's an interesting time, and we don't think it's too early at all," Mahajan said. "The promise of augmented reality specifically is a big one."
Market research firm PitchBook said that about $4 billion has been invested in virtual reality firms since 2010. The most active has been Rothenberg Ventures and its River virtual reality accelerator, which have made 23 investments, followed by Intel Capital with 10 and Google Ventures with six, PitchBook said.
Mahajan is an entrepreneur who has founded companies later acquired by Google and Zynga, and was a co-creator of the social networking game "FarmVille."
He is joined by fellow managing partners Phil Chen, who founded the HTC Vive virtual reality project for consumer device maker HTC, and Paul Bragiel, who was an early adviser to companies like Uber.
Technology adviser firm Digi-Capital projects that the augmented reality market could be worth about $150 billion by 2020.
Google Glass, wearable glasses that project computer-generated information in front of a wearer's eyes, showed some of that potential, even though the device itself failed to take off, Mahajan said.
It showed enough potential in 2013 to prompt the Glass Collective, a fund put together by big-name firms Andreessen Horowitz, Kleiner Perkins Caufield & Byers and Google Ventures.
"Google Glass was a great idea, but just ahead of its time," Mahajan said.
Presence Capital has also invested in Harmonix, a virtual-augmented reality company formed by the makers of the video game "Rock Band," and Waygo, a startup with augmented reality technology that translates Asian languages into English on the fly.