Don Stein

🏆 Guide to Raise Capital for XR Startups 🏆

Published 3 months ago • 17 min read

▶️Embark on Your AR/VR Funding Journey with Confidence

Think you have the next breakthrough in the realm of AR/VR? You're onto something big? As with any rocket-ship, the journey from concept to reality requires fuel - capital. This is your roadmap to that critical resource. This guide includes:

▶️Quotes from AR/VR founders
▶️Lists of AR/VR Investors
▶️Contact info for Leading AR/VR funds
▶️Investment Thesis Breakdown
▶️Pitch Advice
▶️10 Most Common VC Questions for AR/VR
▶️Why is AR/VR Harder to Raise than SaaS?
▶️8 Signs an Investor is or isn’t Interested
▶️Summary: Downloadable assets

Section 1:


How to use this guide

This guide is built for AR/VR founders to learn from the perspective of an AR/VR investor who’s been doing this since 2015.

Everyone learns in their own unique way, so I suggest you focus on the method that’s best for you. It could be reading it all through once, and taking notes. Or it could be skipping around and using it as quick advice before your meeting.

Either way, please let us know if it helps in the comments!

Preparation and what to expect

I can imagine how hard it is for you… because I was there. In 2019 I was running a VR startup and saw first hand how difficult of a market it is to grow a business and to raise venture. I also ran an AR/VR specific venture fund so I see tons of startups with unmet potential thanks to a market that weighs heavily. Sometimes it’s not the team's fault, it’s the market. But then again, there’s a handful of teams in AR/VR who figured out how to be successful. And so can you.

Section 2:

▶️Quotes and Insights

3 people with 8+ years of experience in the industry.

We asked industry veteran, Neville Spiteri, for his perspective on the current market after 9 years of building successful VR content

WeVR, creators of TheBlu, produced one of the most iconic VR experiences in existence, TheBlu brand and reputation is known amongst all insiders as one of the earliest pieces of VR content that became a hit at every conference.

We asked their founder, Neville, about how TheBlu came to be:

In 2014 our CTO was hardcoding thermal throttling on the early Samsung Gear VR prototype to find the balance point between not getting nausea from low perf on the one hand, and not burning your face on the other! TheBlu Whale Encounter was the first room-scale demo developed and shown outside of Valve on their infamous ‘-1 prototype’ headset!

He’s been involved in VR development since 2014, so to hear him point out there are now ‘patters to match’ for founders to find success is sage advice.

“With Meta Quest having become an established growing platform, and with other providers like PSVR, Vive, Pico in the market, there are now clear patterns to match and build on. That means investors have something to work with now. And of course... one word - Apple Vision Pro.”

It is the founders job to identify those patterns, and succinctly craft a pitch around this story - that’s what you’ll get from this guide in the ‘Pitch Advice’ section.

We asked Maddie Callander, Partner at the world's most active AR/VR investor, Boost VC, for her perspective on the current market after working with 60+ AR/VR startups over the last 8 years

If you’re looking for a $500k check, pre-seed, look no further than Boost VC.

“At Boost VC we've invested in 60+ AR/VR Startups since 2015. Pixel Ripped, JigSpace and Puzzling Places were some of our earliest investments.” Maddie and Adam Draper’s deals also include Shapes, FitXR, SideQuest, Golf+, Alta, and Arthur.

In addition for AR/VR, they also invest in Deep Tech startups across aerospace, robotics, AI/ML, climate, biotech, and crypto.

“First and foremost, we invest in people. Humans who are committed to a bigger mission and having a massive impact. Founding teams whose self-confidence, motives, and drive are authentic for the company. And those humans who have the energy to weather the lows, and use momentum during the highs. We bet on founders who inspire us and challenge our worldview.”

We asked Silicon Valley Angel, Larry Braitman, for his perspective on the current market 8 years after first investing in AR/VR

“In some ways, it’s totally different, and in some ways it’s the same.”

What he means by this is that although the market has grown significantly in the number of headsets out there, it is still much too small of a market for VC’s and most Angels to back early companies. Other than Rec Room, which Larry remembers demo’ing as one of their first 1K users, we’ve really seen no truly venture bankable startups in the space. Rec Room found success as a result of launching on Xbox just as much as VR.

“Following the Rec Room playbook is an interesting one. You build your social game for VR, cultivate an early community, and then when you bring on venture capital you begin to scale to other gaming platforms with larger audiences (Xbox, or PlayStation).”

The reason this playbook offers opportunity for founders is because there’s less competition in VR, so it’s theoretically easier to find engagement loops for your game, then it becomes the founders job to port these behaviors to other gaming consuls.

Bonus: we wanted to highlight an unbelievable example of how AR impacts the world in a positive way

It’s amazing the impact AR/VR is having at a small scale, but this is the industry wide challenge. How do we find scale? Imagine if every fire station used Longan Vision Corp Fusion Vision System. The impact leads to a safer world, for us and for first responders.

AR technology provides first responders with hands-free capabilities, allowing them to navigate dark and smoky environments. By overlaying correct information, they can save more lives and quickly enter and exit dangerous environments,” their founder told us.

Section 3:

▶️Lists of XR Investors, Contact Info, Plus, Discovering and Pitching the Right Backers for Your XR Venture

The top 12 investors you need to meet

Here are 12 names of investors who are amongst the most knowledgable and active when it comes to AR/VR investments, in our next guide we’ll include a section about, ‘how to send a cold message to an XR investor on Linkedin?’

Step-by-Step: how to find more AR/VR investors

It’s important you put in the hard work to find AR/VR investors, and I’m going to show you the exact steps I take in order to find them. It’s simple, and just requires 5 minutes.

Step 1: It’s time to leverage Crunchbase for free. Search something like ‘Virtual Reality pre-seed deals.’ You’ll see a list of companies who have raised recently.

Step 2: Click on one, and you’ll see news articles connected to this company about their fundraise. I clicked the second article.

Step 3: In the first paragraph it gives me all their investors: MetaZone announced today the completion of its US$3 million seed round co-led by metaverse industry leaders, Sfermion and CMT Digital, to expand their tokenized app platform pioneering the META, (Metaverse Enabled Tokenized Application). Top web3 funds Tess Ventures, IOSG Ventures,IVC (Infinity Ventures Crypto), Polygon Studios, MHC Digital, and LucidBlue Ventures also participated in the round.”

There you go. You just got a list of 10+ VCs who you know have all at least done one Metaverse deal. Easy. Chat with one of them and they’re highly likely to know someone who has interest in AR/VR. Do this over and over and over, soon enough you’ll find the one who loves AR/VR and sees your vision. It’s a numbers game.

Section 4:

▶️Investment Thesis Breakdown

Investors thesis are usually built to prioritize funding top teams and strong metrics.

If you answer ‘YES’ to any of the below, then you are considered an impressive team by default.

7 shortcuts to impress a VC

  1. Do you have a team who’s previously sold a company for more than $5M?
  2. Have you previously raised more than $5M for a business of yours?
  3. Have you previously done more than $1M in revenue for a business you started?
  4. Do you have incredible growth of user numbers, with low churn, and high engagement?
  5. Is your revenue growing 20% MoM for a sustained period of months?
  6. Did your team take a massive risk to start this company like leaving a cushy job in Big Tech?
  7. Has your team previously worked together before and been successful?

And here’s a secret, the 8th. Is your team community and mission-driven?

We asked Maddie from Boost VC how they make such high risk decisions, on early startups with many unknowns, yet do it so well. “As pre-seed investors, we often invest pre-launch, so we are looking for metrics around building the user community or conversations with future customers,” she also added, “first and foremost, we invest in people. Humans who are committed to a bigger mission and having a massive impact.

Metrics matter the most

Enterprise: An enterprise business is all about retention & sales. You must be able to demonstrate revenue. It’s important to keep in mind the quality of your revenue. The best type of revenue is recurring, and as long as you have a low churn rate then it’s logical for a VC to believe you’ll be able to grow revenue with the right effort. The worst type of revenue is for a one-off project. The investor knows this spike in revenue will lead to a point in time when the project is over and your business must either lay off staff members, or find another one-off project which pays for the current team. Project based revenue is nearly impossible to raise capital for from a VC, they’ll consider your “enterprise” startup an agency.

Consumer: If you’re a consumer business, engagement is first and foremost the key. Using my last startup as an example, we built a beautiful product, had a great team, but we could just never get people to use our app often enough. You can see our product ended up much more beautiful than it started.. But our user engagement was still minimal and ended near where it started...0.

Retention was also the crux of why our last VR startup failed. As you can see, in December we hit 10K MAU, but by January we were back down to 2K.

This means people were coming to the app for download, but then not continuing to use the product. 95%+ of users who tried our app didn’t continue using it 2 weeks later. This was a major reason we didn't deserve to raise.

Section 5:

▶️Pitch Advice

Story template

There is a Pitch Deck Story Template which provides the proper story architecture for an AR/VR startup, it can be found in the ‘downloadable assets’ section of this guide.

As I stated above, VCs care about team. Therefore an early key slide is your people slide. Here are my personal guidelines when it comes to finding the right personal story which will unlock capital:

If you answer ‘no’ to all of The 7 Shortcuts to Impress a VC, then make sure you explain why you’ve done something similar and you deserve the capital.

We need to rely on telling stories about school, work, business. You need to show how you’ve developed entrepreneurial traits (grit, intelligence, sales) through different experiences. It could be as left field as dealing with death, love, divorce, family.. whatever it is. Just show you have the right qualities.

If you came from a poor family, and paid your way through college, that’s AWESOME. Frankly, if this story is told in the right light, then it’s 10X more powerful than someone who graduated top of their class from Harvard. So, find the story of where you display founder traits, and draw confidence from telling that life story over and over.

Pitch deck design principles

Once you have filled out the pitch deck story template, you need to design it to be digestible within 30 seconds over email, as well as capable to be extended out to 10 minutes in a verbal presentation. 4 Pitch Deck Design Principles

  3. Custom visuals
  4. minimal small text

Example of a B-grade deck

Why isn’t this A-grade?

There just too much information that isn’t necessary. “$1.8B in sales of virtual goods" (2019)” would have driven the point home, instead I added all this extra wording.

I did it again here, and I see founders doing it all the time. Below is a confusing slide: there’s too much text, this on a mobile device would be near impossible to read, therefore the investor will get distracted from the core story. This is a super important point - your deck should be optimised for viewing on mobile!

Pitch deck design tools

I suggest designing your deck in Canva, this gives you hands on time with the story. It’s my belief that the person doing the pitching for the capital should be the designer, so learn Canva. It’s not that hard, and has great templates. Avoid Powerpoint, this design style really sends the wrong messages to a Silicon Valley native. Figma results in the best designs, the most “Silicon Valley,” but is also the most time consuming to learn.

Pitch deck distribution tools

I love using Docsend. Here’s an example of one of the decks I used for Teooh. Docsend tells you the most popular slides. It also shows you how much time people spend on each slide:

This tool is invaluable for gathering investor investor metrics. One pro tip: do not re-design it every day, this is an easy trap to fall into. You should try to space our your re-designs by 2 weeks. Enabling you time to gather a larger sample size of feedback.

P.S. Want Your Deck Featured on Video!

⚠️ Join our new segment, 'Roast My XR Deck'. We’ll review your deck in a video we feature in our next newsletter. You have the two founders of the newsletter, who have raised, recording a for our audience! What’s better exposure than that? Expect honest feedback, tangible advice, and some jokes. Pay us for high visibility and feedback - if you can handle it ⚠️

Section 6:

▶️10 Most Common VC Questions for AR/VR

  1. How many headsets exist in the market?
  2. Which AR/VR companies have raised the most money in our space, and who are the VCs who backed them?
  3. But isn’t the Metaverse dead? Why hasn’t VR taken off yet?
  4. Isn’t AR too early?
  5. What do you think about Apple’s Vision Pro?
  6. How many users does your AR/VR app have, are they paying or free?
  7. What’s the top 3 reasons that users and customers are churning?
  8. How will you 10X your topline numbers over the next 12 months?
  9. If Apple only sells 100K headsets, are you going to be able to survive?
  10. Are you on the Meta Quest store? How do you get on if not?

You must have quick, intelligent, answers to each one of these questions prepared before going into any meeting with an AR/VR investor.

P.S. Want Help Preparing For Your Raise?

🍎Don’t wait until it’s too late and you’re out of runway. There’s no such thing as a bad time to start networking with investors. Here’s an 8 week long fundraising course specifically for XR startups. Meetings happen once per week, with weekly fundraise assignments and goals for all members. What’s $2.5K when you can raise 10X more than this amount in just one meeting? Sign up here if you want a bullet proof pitch, tested with investor meetings and warm introductions.🍎

Section 7:

▶️Why is AR/VR Harder to Raise Venture Capital for than Traditional Startups?


The answer is ‘hardware.’ As an AR/VR company you are at the mercy of headset manufacturers (Apple, Meta, Pico). If they sell a lot, then you have a big market. If they don’t, then you don’t.

When an investor looks at a SaaS company living on the 2D web, they’re more likely to fund them given they have a massive install base (Billions of potential users vs 10M’s of potential headsets). To counter this, show how your XR product is either a high ticket item for Enterprise, or a consumer product where people spend multiple hours per day. You must figure out how to leverage the small VR/AR install base to your advantage. Some ideas:

  1. Cross-Platform Compatibility: Show compatibility with existing technologies, such as mobile devices and PCs. This approach can expand your potential user base beyond just headsets.
  2. Unique IP: Highlight any unique intellectual property you’ve secured. VR or Smartphone.. a well known IP can cut thru the noise.

Section 8:

▶️8 Signs an Investor is or isn’t Interested

How to build chemistry with investors

They say, ‘raising capital is like dating.’

When you go out on a date, it’s pretty obvious within the first 10 minutes if you two are going to have chemistry together. And as you continue to go on dates, it becomes more or less obvious if you two have long term chemistry which can sustain ups and downs.

Fundraising is similar. You’re going to know who’s the right investor for you right when you meet them. Maybe you’re not yet qualified enough to raise capital from them, but at least in your head you know one day that it would be ideal to work with them.

So if you meet an investor who is ‘out of your league’ but you have great chemistry, awesome. Use this to your advantage, ask them, ‘what metrics do I have to hit in order to raise money from you one day?’ – they’ll tell you. After the conversation is over, say to them, ‘’And is there anyone else out there who you think I might get along with? Maybe someone who’s more suited for my stage of company?’ If they felt the magic, they’ll want to help you, and you’ll get an intro to someone great.

5 signs that an investor is interested in funding your business:

  1. They schedule a follow up - they don’t keep talking about it, but they actually actively work to put it on the calendar with a calendar invite, zoom link, and the whole shebang
  2. They ask to meet your team - this is a great sign that they’re interested in the business. They want to meet the people who are managing the entity, and potentially their money
  3. They provide you honest, raw, constructive feedback – investors who don’t try to poke holes in your story are probably too indifferent to make a decision. You want to ruffle some feathers, you want a VC who will ruffle your feathers, a healthy back and fourth debate during the fundraise process is important as it previews how you two will behave in a boardroom during disagreements. You need to feel like you can get through anything as partners
  4. They introduce you to their team, and other investors – VCs normally don’t act alone. This could be with internal teammates or external partners, but if they intro you to their network, then you’re on the right track.
  5. They sit down with you multiple times, and ask for in-person meetings as time goes on – this is a great hack for investors looking to get to know you over a long time horizon. But be careful they’re not wasting your time, I go into detail on how to spot the negative side of this in the next section.

3 signs that an investor isn’t interested in funding your business:

There’s nothing worse than thinking you’ve got someone who wants to invest, only to eventually realize they never had any intention.

  1. They only ask you questions about the market and competitors — but they don’t ask about your individual business metrics and team. This is a clever technique VCs use to brain drain, aka learn from you for free. They’ll keep asking what seem like great questions, but they’re not actually learning about your business metrics. It’s not on purpose, it just kind of naturally happens given the meeting dynamics.
  2. They keep using the word, ‘early’ – the most common reason a VC says no is, ‘we just think it’s too early.’ What they’re really saying is that they don’t want to deal with you until you’ve actually done something that impresses them. So keep an eye out for the word ‘early’ and try to understand the context of how they use it.
  3. They tell you they’re not interested - I cannot tell you how many founders hear ‘no’ or ‘not now’ from a VC but then take that as a challenge. This is not a challenge, they are doing you a service by telling you ‘no’ and you need to listen. Go use that time to open new doors and find new VCs.

Efficient time management and avoiding time-wasting meetings

The saying goes, ‘you’ve got to kiss a lot of frogs to find your Prince.’ Well pucker up because fundraising is full of frogs, but eventually you’ll find your lead.

The only thing I optimize for when fundraising is

  1. Get to decision makers as fast as possible.
  2. Keep a list of 100 investors who said ‘no’ and do not complain until that list is actually at 100.
  3. Random luck is everything – so many times I met an important investor by chance. Could have been like meeting Larry Braitman at an event, or meeting Mike Acheson through my school alumni. The key is to just keep having conversations and asking around. Great people are out there for you if you maintain looking over multiple years.

Birds fly, fish swim and deals fall through, do not stop talking to other investors just because positive ground is being made with a particular investor. If that deal falls through, you need other wheels still in motion.

Section 8:


Thanks so much for reading.

As a special thank you and bonus, we’ve included 6 links below which can add rocket-fuel to your AR/VR startup.

Valuable resources for AR/VR entrepreneurs:

Section 9:

The Authors: Don Stein & Laurie Owen

If we are not already connected through LinkedIn, please send us a connection request so we can sync up.

Metaverse Monday is a reader-supported
publication. To receive new posts and
support our work (this guide took days of work),
consider becoming a subscriber.

Section 10:

BONUS: More Quotes

What has been your biggest challenge as an AR/VR founder?


Antti Martikainen, Virtual Dawn

"Popularization of XR devices and implementation in organizations


Arvind Ramni (Co-founder) FX Get Active

“Creating a community of VR users - Not many people in the real world relate to it. To go after this niche and grow the customer base has been a challenge.”


Gildas Dussauze, VRtuoz

Developing a business, finding financial partners in a sector that is still emerging and oscillating between hype and disillusion.”


Marcelo Echevarri, Numinos

The resilience needed to push forward in an industry still lacking mass adoption.”


Jason Harrison,

The biggest challenge we have right now is education and awareness - not enough businesses know the jet fuel that XR can be for them.”


Gregory Gettinger, Motion Learning

The growth will come over time as the VR headset penetration grows. Biggest hurdle is for sure is that only 2-3% of US households have a VR headset vs. 99.5% mobiles. The more VR expands, the more VR businesses expand.

How will Apple impact the industry?


Usman Mir, On Linkedin

With Apple entering the fold with a head set I foresee mass adoption of XR. They know how to make things seem cool to people out side of the industry, they have a proven track record in marketing.


Mischa Winkler, On LinkedIn

“The sleek, no compromise industrial design we are used to from apple. VR and AR, best in class.”


Eric, Virzoom

“Small, light weight, attractive, and tethered to external battery to reduce the size and weight of the headset, and allow for a more attractive design. MR, near photorealistic pass-through, and color representation that's equivalent to iPhone 14.”


Don Stein, Metaverse Monday

“Bold prediction - just wait until they start running ads on TV, that’s when this takes off. Imagine watching the Super Bowl and seeing a sick ad in Apple style of someone using their Vision Pro. I think TV commercials will be the key.”

Don Stein

Founder of Fengari LLC

Subscribe to read and watch weekly interviews I conduct which help you craft a world view, business strategies, and your perspective on life.

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