Deeptech/VR/AR/Analysis/ Three questions about Blippar’s funding problems Did the UK startup have a real chance or is the AR market just for big Silicon Valley tech? By Maija Palmer 10 December 2018 \Deeptech VR startup Moonhub raises $2.6m to hitch workplace training up a gear By Miriam Partington in Berlin 25 April 2022 Deeptech/VR/AR/Analysis/ Three questions about Blippar’s funding problems Did the UK startup have a real chance or is the AR market just for big Silicon Valley tech? By Maija Palmer 10 December 2018 Who wants this company to become insolvent? The British augmented reality app is understood to be facing insolvency within days after a disagreement between shareholders has prevented it from going ahead with an emergency fundraising. Khazanah, the Malaysian sovereign wealth fund that owns 12% of the company, is understood to have blocked an attempt by property developer Nick Candy to inject a further $5m into the business, leaving the business with no option but start insolvency proceedings. Stories in the Times(£) and Telegraph(£) had the detail on Monday. According to the Telegraph, Blippar is blaming the disagreement on a change of leadership at Khazanah, following Malaysia’s recent elections which ended the ruling coalition 60-year hold on power in the country. Nick Candy owns 49% of the company. But there is also speculation that Nick Candy, who owns 49% of the company, could be planning to buy the company out in a pre-pack administration deal. David Rubin & Partners, who have been lined up as administrators for Blippar, also worked as administrators when Nick Candy bought out another of his technology investments, Crowdmix, when it collapsed in 2016. Pre-pack administrations allow a company to continue operating while it is sold to a new owner. It creates less disruption – ongoing contracts keep running, staff often keep their jobs, but these deals have been controversial in the past as they can sometimes be seen as a way for a company to avoid paying creditors. There is a good explanation of the advantages and disadvantages of pre-packs here. Could the Blippar business model have worked? Blippar’s numbers make sorry reading. It has raised nearly $150m since it was founded eight years ago by Ambarish Mitra, Omar Tayeb and Jessica Butcher, most recently a $37m round in September 2017. It burned through that money at an increasing rate. Blippar’s last financial accounts, for the year to March 31 2017, showed sales decreasing: £5.7m vs £8.5m the previous year, while administrative expenses were going up – £40m vs £27m the year before. Blippar said costs had mounted because of a focus in technology development. Blippar received a lot of hype after it launched in 2011 and ran advertising campaigns with more than 1,000 brands including high-profile names like Coca-Cola and Nestle. But it seemed that the company struggled to convert people who might have downloaded Blippar for a specific ad campaign into regular users. It has had just 1-5m downloads on the Google Play store, compared with 10-50m for rival AR app Layar, which Blippar bought in 2014. Blippar wanted “to stop being an advertising agency in order to start being a tech player”. Blippar’s mistake may have been to concentrate too much on the consumer side of the business, rather than getting the developer community onside. Blippar did start to pivot away from a focus on marketing campaigns towards developing a technology platform and licensing its AR developer kit. Nandu Nandkishore, a Blippar board member, told the FT Alphaville in 2017 that the company had decided “to stop being an advertising agency in order to start being a tech player”. But arguably by then it was already too late. Is AR just for big companies now? Blippar had a big vision of becoming the Google or Wikipedia of visual recognition, a visual browser that could identify every object in the world, but it was up against competition from big Silicon Valley tech. Augmented reality needs a complex ecosystem to work and one of the pieces that is missing at the moment is the hardware. Simply having AR work on a smartphone is not interesting enough, as we all learned from the intense – but brief – craze for Pokemon Go in 2016. Apple, Google, Amazon and Microsoft are all investing in AR platforms. Not only do these companies have deep pockets far beyond Blippar’s $150m, but working with Apple’s ARKit, which integrates seamlessly with millions of iPhones and iPads, is a much more compelling proposition for developers. Raimo van der Klein, co-founder and chief executive of Layar, the AR company acquired by Blippar, says the big tech companies will, at least for the time being, run the show on AR. “Something like AR glasses from Apple could really open a mass market.” “The most interesting companies in AR are Apple, Amazon, Google and Microsoft who are all investing heavily in platforms. Tim Cook at Apple really believes in the technology and something like AR glasses from Apple could really open a mass market. In a few years all AR applications will run on a platform run by one of the big four.” He says there is a place for smaller companies, but this is focused on niche technology. “The only thing smaller companies can do now is to solve very specific tech problems that will make the whole ecosystem work. Next to that there are some possibilities to create games and AR features in existing apps, which is not as much of an interesting business,” he says. Photo of Ambarish Mitra, CEO of Blippar at Web Summit. Credit: Stephen McCarthy/Web Summit via Sportsfile Related Articles A&E and AR: How augmented reality is transforming surgery Sponsored by Lightspace Click here to read more Mobile gaming: Soon bigger than the music market? 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