How to invest in augmented reality

Augmented reality (“AR”) is one of the hottest topics in tech right now. Nearly every major player in the tech industry—from Alphabet to Zoom—is investing heavily in the research and development of new products to bring to market. 

As the technology matures, more and more use cases are coming to the surface, driving up demand in several industries, including retail, healthcare, and automotive, to name a few. 

And, of course, venture capitalists have been actively investing in the space as well. In 2021, VCs injected nearly $3.9B into VR/AR startups.

With all the hype surrounding the augmented reality space, many investors wonder how to get in on the action. Read on to learn what the technology is, how it works, and how to find opportunities in augmented reality companies to invest in.

What is augmented reality?

Augmented reality (“AR”) is an enhanced version of reality where live direct or indirect views of physical, real-world environments are augmented with superimposed computer-generated images, sounds, video, text, or other sensory enhancements. 

AR can be defined as a system that fulfills three basic features: a combination of real and virtual worlds, real-time interaction, and accurate 3D registration of virtual and real objects. 

How does augmented reality work?

You’ve probably heard of virtual reality, where users strap on a headset and are transported to a computer-generated world. Augmented reality is similar but with one key difference: users interact with digital information overlaid on top of the real world instead of being immersed in a completely artificial environment. 

This includes anything from Google Maps directions to video game characters. One of the most popular examples of augmented reality is Pokémon Go, where players use their smartphones to catch virtual creatures that appear in the real world. 

Other examples include companies like Snapchat (Snap Inc.) filters and IKEA's app that lets you see how furniture would look in your home. 

But AR isn't just for gaming, social media, and shopping experiences—it also has practical applications. 

Real-world use cases of augmented reality (outside of gaming)

Augmented reality is currently being used in various industries, from healthcare to education to manufacturing. Here are a few real-world examples of how the technology is being used in these industries.

Augmented reality in healthcare

Imagine you're a doctor performing surgery. You have a patient on the operating table, and you're about to make a delicate cut. But just before you do, you want to be absolutely sure that you're not going to hit any important organs or blood vessels. 

So you reach for your AR headset and switch on the ultrasound function. Suddenly, an image of the patient's insides appears in front of you, superimposed over their body. You can see exactly where all the major organs are located, and you make your cut confidently, knowing that you won't cause any damage.

AR headsets can also be used to provide real-time translations for doctors working with patients who speak different languages or display vital information such as heart rate and blood pressure. 

Augmented reality in education

Imagine a high school student who is struggling with algebra. Every day, she sits in class and tries to follow along as the teacher works out problems on the chalkboard. But no matter how hard she tries, she can't seem to make sense of it all. 

As a last resort, she decides to download an augmented reality app that her friend told her about. The app projects a 3D image of the algebra equations onto her desk, and she is finally able to visualize how they work. As a result, she is able to complete her homework and even ace her next test.

Augmented reality in manufacturing

In a manufacturing setting, augmented reality can be used in a number of ways. For example, it can be used to provide instructions to workers on the assembly line. By overlaying text and images on top of the real-world environment, AR can help workers more easily understand and follow complex instructions. 

Additionally, AR can be used for quality control purposes. Any company that makes a product needs to have strict quality control measures in place, especially in the pharmaceuticals, food and beverage, and medical device industries. 

In industries with such high-quality standards, AR allows factory workers to highlight defects and identify problems that need to be addressed, ensuring their products are safe for their consumers.

Benefits of augmented reality

There are many benefits to augmented reality. One is that it increases user engagement. For example, interactive AR games are more immersive than traditional video games, and retail shoppers are more likely to remember products that they've experienced through AR.

AR can also improve customer experience. For example, retailers can use AR to provide customers with information about products, and educational institutions can use AR to provide students with a richer learning experience.

Lastly, AR can create new revenue opportunities. For example, businesses can use AR to create new marketing and advertising channels or sell premium content and experiences.

As the technology continues to develop, augmented reality will likely become increasingly important for businesses across a wide range of industries. Those who invest early in AR technology may be well-positioned to take advantage of the numerous opportunities it provides.

How to invest in augmented reality

The world of AR is growing quickly, and many companies are vying for a piece of the pie. But with so many options out there, it can be difficult to know where to invest your money. 

The best place to start is to learn what types of companies are needed to make the end product. In the augmented reality industry, hardware, software, and infrastructure companies combine forces to create products.

Here’s what they do:

1. Hardware companies: These companies make the glasses, headsets, and other devices that run on AR applications (software). Some of the leading names in this space include Magic Leap, Oculus, and Google Lens.

2. Software companies: These companies create the applications that will run on the hardware. Some of the leading names here include Google, Apple, and Facebook.

3. Infrastructure companies: For AR to reach its full potential, a lot of investment will need to go into developing the infrastructure to support it. This includes 5G networks, edge computing, and data analytics companies. Verizon and AT&T are two companies that are investing heavily in this area. As of January 2022, the two have spent a combined $60B+ on 5G alone.

Now that you know what kind of companies are involved in the space, you can begin to learn about the companies you are interested in. 

Here are some things to consider while doing your research:

• First, consider the size and scope of the company. A smaller company may be more agile and better able to adapt to the rapidly changing landscape of AR, but a larger company may have more resources to invest in research and development.

• Second, look at the team behind the company. What is their experience in the AR field? Do they have a track record of success?

• Finally, take a close look at the product itself. Is it something that you believe will have broad appeal? Does it solve a problem that you're passionate about? Answering these questions will help you narrow down your options and choose a company that's right for you.

Augmented reality is a fascinating and rapidly evolving technology with a wide range of potential applications. If you're interested in getting in on the ground floor of this industry, there are a few things to keep in mind. 

First, it's important to understand the different types of augmented reality and how they work. Next, think about what industries or sectors might be ripe for disruption. 

Finally, do your research and invest wisely! There are already some exciting examples of businesses using augmented reality to great effect, and we can't wait to see what else comes out in the years ahead. 

If you’re looking for AR companies to invest in on Republic, keep an eye out for new opportunities here.

The content herein is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.