Attendees try out Nreal mixed reality glasses at the MWC Shanghai exhibition on Tuesday, February 23, 2021 in Shanghai, China.
Kilai Shen | Bloomberg | Getty Images
GUANGZHOU, China – China’s augmented reality (AR) eyewear maker Nereal has raised $100 million for international expansion and new product development.
Augmented reality refers to the technology that makes it possible to push digital images into the real world, a field invested by the world’s largest technology companies.
A person directly aware of the issue told CNBC that the funding round valued Neriel at $700 million. The person was not allowed to speak publicly about the assessment.
Neriel declined to comment on the ratings.
Nereal CEO Chixu told CNBC that the company plans to spend the money on research and development and expand its footprint globally.
“China is undoubtedly a huge market, and (we) will enter the United States, and probably more, next year,” Xu said.
Nreal hasn’t launched AR glasses in China yet, but its flagship product, the Nreal Light, is sold in several markets such as South Korea, Japan, and Spain.
The Nureal Light is a lightweight pair of glasses that attach to your smartphone. The user can then experience a so-called mixed reality app, where digital images are superimposed on the real world.
Backers of the start-up include several major investors, including Nio Capital, the investment arm of electric vehicle maker Nio, and Sequoia Capital China, a venture firm.
Xu describes Neo Capital as a strategic investor and believes the two companies can work together.
“An AR and an EV (electric vehicle) together could be very interesting in the future… You can be sure that there will be more and more EVs on the road. People spend more time, perhaps, using their car, the AR and the car. The combination, however, opens up many other possibilities.”
new product launch
Xu said Neriel was planning to announce a new product next week and couldn’t elaborate on it before it went on sale.
However, the CEO said that the new glasses are “an entirely new design” and are lighter, more comfortable and cheaper than the current Nereal Lite model.
“The low price of this product could make it much easier to enter other markets like China,” Xu said.
The new glasses will stay connected to mobile phones, and Xu wants new features to encourage people to use them on a daily basis.
Global tech giants are excited about Augmented Reality.
Apple CEO Tim Cook has called AR the “next big thing” and the iPhone maker is reportedly working on a headset. Facebook, Microsoft, Google and other tech companies are investing in augmented reality.
Mr. Xu said he welcomed the competition with these stalwarts. “I think the best products will win,” he said.
new business model
Nreal has its own operating system called Nebula which runs on the headset. Like Apple with iOS on the iPhone, developers can build apps for Nebula and use them through the Nebula headset.
Putting engaging apps on AR headsets is the key to success, and Nreal is trying to lure developers to Nebula. The company currently has 8,000 developers on its platform.
Apple’s model typically relies on reducing total sales by 15% to 30% by purchasing apps distributed through the App Store. This is how you generate some of your service revenue.
But the model has been criticized. Developers could not directly charge users for in-app purchases. Instead, they had to go through Apple’s in-app payment system. Then Apple takes the cut.
Epic Games, developer of the hit game Fortnite, filed a legal challenge against Apple last August. This month, a judge issued an injunction that Apple could not prevent developers from providing links or other communications that steer users away from Apple’s in-app purchases.
“There are many changes to Apple’s business model. In the recent proceedings between Apple and Epic, people will revisit this business model,” Xu said.
“We need to provide developers with a more friendly business model.”
The CEO said this would mean reducing the fees that the Neriole-powered app store can charge. It also means providing more services to developers, such as helping them improve their marketing and products.
Xu called this a “mutually favorable situation.”
Nereal is focusing on product and country expansion, but Xu told CNBC in a July interview that the company plans to release it within five years.