Why Magic Leap May Be Raising $1B in Funding

Is secretive augmented-reality startup Magic Leap about to secure an additional $1 billion in funding, a year after the company announced a $542 million investment round led by Google? A new report from the South Florida Business Journal says this is so, according to two anonymous sources that are “close to the deal.”

When I asked Magic Leap, of Dania Beach, Florida, about that the company responded that it doesn’t comment on financial speculation, which isn’t surprising.

But it also wouldn’t be surprising if Magic Leap was raising that kind of funding as it moves forward with its development of a headset that can mix digital, 3-D images into the real world.

When I tried out Magic Leap’s technology last year (see “10 Breakthrough Technologies 2015: Magic Leap”), I saw some really phenomenal images that blended incredibly well with the real world around me. Monsters appeared that seemed to be walking right in front of me, in the middle of the company’s break area, for instance. But these colorful, vivid images were shown to me on bulky, and essentially stationary equipment. One demo was provided using gear on a kind of computer cart, which, while technically mobile, wasn’t something I could move around with.

Magic Leap also showed me a non-functional design prototype to illustrate what they’re aiming at: it looked like a bulky pair of sports sunglasses attached to a small battery pack. Getting the working technology to fit inside there will take time, skill, and, most likely, plenty of money. In particular, it could be tricky and expensive to scale up the silicon photonics manufacturing process needed to make the special “light-field chip” that Magic Leap says its technology uses (see “Magic Leap Needs to Engineer a Miracle”).

Furthermore, Magic Leap hasn’t yet announced any details about the price or availability of the headset it’s building, and has been showing off videos of what it can do in dribs and drabs. The most recent one, a video that stated it was “shot directly through Magic Leap technology” on October 14, was unveiled this week at the Wall Street Journal’s WSJD technology conference. It showed a small virtual robot moving around under a real desk, and a glowing model of the solar system hovering over another desk.

Teasers like that make it seem as though the company plans to keep taking its time, developing its technology mainly behind closed doors, until it feels comfortable showing off something complete. It’s possible that doing all that will require more than the nearly half-a-billion dollars raised last time around.