(originally posted April 30th, 2014 on WordPress hosted blog (gasp! Don’t judge, I’ve seen the light!))
Thanks to Instagram, Tumblr and WhatsApp (to name a few), billion dollar tech acquisitions on their own are not enough to warrant much discussion. Layer on the fact that it was a Kickstarter darling a mere year and a half ago, the transaction loudly proclaims a large bet by a highly critiqued, behemoth player and it also brings me one step closer to the Holodeck; you have my attention Facebook and Oculus!
Some elements that I found particularly interesting:
1. Valuation path and funds raised â€“ the valuation growth on its own is incredible. Oculus started with a $2.4M Kickstarter campaign in September 2012, raised a $16M Series A on a $46M valuation in June 2013, a $75M Series B on a $287M valuation in December 2013 (a mere 6 months later!) and exited 3 months later at $2B. For the record, this is bananas.
2. Most successful exit for a company that started on Kickstarter was met with outcry from supporters – Oculus was a Kickstarter success story and a dream come true for many gamers and sci-fi fans. Post announcement, early supporters were vocal on their Kickstarter page and felt Oculus had â€œsold outâ€ and â€œabandonedâ€ their hacker roots to a â€œsoulless corporate cash cowâ€. Some went as far as declaring it the death of Oculus and Kickstarter. I donâ€™t believe it will lead to the demise of either, but it should be a lesson learned for the more idealistic Kickstarter backers. There is an element of risk in your pledge that you may not think of. Some of these companies will want to continue to grow. To do this they will require access to additional funding via VCs or a merger/acquisition in exchange for equity (which means this new party will have a say and are rewarded based on the value growth post investment). You may not like these new partners and their interests are not necessarily aligned with yours. The product could change and may not look and feel like you envisioned.
3. Validation of VR â€“ this transaction validates and commits to the development and support of VR for gaming and beyond. This will act as a catalyst in the tech startup ecosystem to foster more interest in and support of the VR space.
4. A highly visible, significant down payment has been placed on the future post mobile â€“ could VR be the next platform for computing and media?
5. Is hardware is the new software? – in a VC landscape that has been so focused on software, this is another proof point of the change of the guard and the rise of the perfect marriage and tight integration between hardware and software.
Gamers – you should be rejoicing. Although it does make it less cool now that they are part of Facebook, this is validation for the sci-fi future of VR you are seeking! This transaction will bring you the Rift quicker, cheaper and hopefully with applications outside of the gaming world.
What will be your first Holodeck experience?