Why new VC firm Presence Capital is focused on virtual reality start-ups

Why new VC firm Presence Capital is focused on virtual reality start-ups
James Batchelor

By James Batchelor

December 10th 2015 at 3:17PM

$10m inaugural funding will be investing in VR and AR projects that could 'transform the world'

A new early-stage venture capital firm has launched today that focuses on companies building projects using virtual or augmented reality.

Presence Capital claims to be the first company of its type to be solely dedicated to these emerging technologies, and aims to help start-ups make an impact with their ambitious projects.

The company was founded by Paul Bragiel, Amitt Mahajan and Phil Chen, all of whom hvae experience working at technology start-ups.

Bragiel has formed three firms and started five funds, and was an early advisor for game engine firm Unity as well as transport service Uber. Chen founded the HTC Vive virtual reality project and was instrumental in securing the partnership between HTC and Valve.

Mahajan, meanwhile, was founder of MyMiniLife – a studio that was later acquired by Zynga – and co-creator of social gaming smash hit FarmVille. He previously worked at Epic on Unreal Engine and Gears of War.

The trio has secured an inaugural funding round of $10m, some of which has already been invested in Rock Band developer Harmonix, which is currently working on a VR version, as well as Waygo and Baobab. The latter creates "cinematic experiences" for virtual reality.

You can find out more at www.presencecap.com.

We spoke to Amitt Mahajan (pictured) to find out more about the firm and what it is looking for in potential investment opportunities.

Why focus on VR/AR firms?
We believe that virtual reality and augmented reality are the next major computing platforms. Anytime there's a platform shift, there's an opportunity to create billion dollar companies.

The unique thing about these platforms versus existing ones is that they represent new ways of interacting with computers. As such, firms that are focused on these technologies need to innovate with new user experiences and focus on what is now made possible when you have the user's full attention.

We anticipate that there will be new and more immersive ways of learning, playing, and communicating that were previously impossible. Our goal is to find exceptional founders building those companies and help them reach their full potential by providing not just capital but ongoing support.

What are the biggest things you have learned about these technologies from your previous experiences? How will you be using this to help the studios you invest in?
We've seen and helped usher in multiple platform shifts. From our experiences working on the social and mobile platforms we've seen that companies early to platforms have unique distribution and reach advantages afforded to them.

For example, a VR app company with great content or product today has a high chance of getting featured on the VR app stores because they want to ensure they are providing their early headset adopters with great experiences. That may not be true in a year or two when there is more competition and the quality bar is higher.

My last company, Toro, was also focused on growth marketing and scaling mobile apps. Many of the same challenges that mobile and social app developers faced reaching an audience will also apply to the VR and AR ecosystem. We will be helping our portfolio founders think about how to create compelling product experiences, best leverage the VR platforms for growth, and raise follow-on funding. 

Why invest in Harmonix, Baobab and Waygo? What was it about their work that impressed you?
First and foremost, all three have exceptional teams and founders. After that, all three teams have shown to be inventive and thinking from first principles about what new ways they can leverage the platforms they are building on to provide unique user experiences and products. 

For example, Baobab is developing animated character-driven stories from the ground up for Virtual Reality headsets. This means that they need to take new problems into account such as where the user is looking when creating their animated shorts. This is something that traditional animations studios like Pixar didn't have to think about with flat television and movie screens because everything they want to show is visible at once.

In exchange for dealing with these new challenges, Baobab's audience is fully immersed in the universes they are creating and experience a sense of scale that is impossible to replicate with existing media.

What do you look for in start-ups that you could potentially invest in? How can devs improve their chances?
There are a few criteria we use to determine what to invest in. The first is the founding team. We're looking for founders with a clear idea and passion for what they are building.

The second thing we look for is a demo to demonstrate technical acumen and an understanding of why VR is the platform for their idea to exist on. Why was it not possible before VR?

Finally, the idea and the market that the founder is going after. How is it going to transform the world? How is it going to become a big business?

Are you considering working with established/veteran devs beyond those you have already invested in? Why/why not?
We definitely are. When you're investing in seed-stage companies, the founding team matters a lot. When you're working with established and veteran devs, you have a lot more signal on what they are capable of and how they react under pressure.

We think that virtual reality and augmented reality are transformative technologies. Like any other major tech shift, I think it will take time before we see the true potential of how these platforms will develop. We're excited to be supporting this ecosystem and the entrepreneurs building the future from the start.