Chinese augmented reality startup Nariel is in full swing. The company, which hopes to bring augmented reality to the masses by creating crisp and lightweight smart glasses, just received $60 million in its Series C expansion round, bringing total funding to $200 million in the past 12 months.
The new investment is being led by Alibaba, which has traditionally been a more pragmatic but less active corporate investor than its main rival Tencent. The Chinese e-commerce giant has a reputation for having a majority stake in startups that could potentially complement its vast retail ecosystem.
However, Alibaba’s investment in coconut is purely financial in nature. Theoretically, these two directions can create a strategic synergy. You can imagine Alibaba adding Nereal to its gaming and video streaming devices, or even developing smart glasses for the millions of food delivery workers who recently wore voice-activated helmets. But with China’s no-confidence vote, the country’s tech giant has undoubtedly become more wary of any investment that could be seen as encouraging unfair competition.
In addition, Nereal, founded by Magic Leap veteran Chi Xu, There is already a club of notable partners. Some of its strategic investors include Chinese electric vehicle startup Nio, short video app Kuaishou, TikTok’s enemy in China, and Baidu-backed video streaming platform iQIYI. Qualcomm is not an investor, but is supplying the OEM with advanced Snapdragon processors and working closely with them to build a developer ecosystem. Nereal is also backed by well-known institutional investors including Sequoia China, Jack Ma’s Yunfeng Capital, Xiaomi founder Lei Jun’s Shunwei Capital, and private equity giants Hillhouse, CPE and CICC Capital.
Despite being based in China, Nereal did not focus on the domestic market, but instead tested consumer appetite in six foreign countries, including Japan and the US. The smart glass maker relied on partnerships with local carriers to promote its devices. In the US, for example, Verizon is helping sell Nreal’s Light Mixed Reality Glass, which costs a relatively inexpensive $600 and can be connected to a 5G-enabled Android device.
With the proceeds from the final round, Neriel will eventually travel to China this year. The funding will also be spent on research and development and expanding the content and app ecosystem, which will be critical to user acceptance.