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Varzo, an early mover in building XR headsets and software for enterprises, taps $40M • Technology Flow

Applications in the Metaverse feel more like a marketing gimmick than something used by most critical users, let alone paid for. But turn to enterprise and it looks like there’s a very lucrative opportunity to find traction. Today, one of the early movers in building solutions for that market is announcing a round of funding to double the opportunity.

Verjo, which makes hardware and integrated software for “professional grade” virtual and augmented reality for industrial and other enterprise applications, raised $40 million, which it will use both to continue R&D and deepen research for its headsets. Verjo has also pushed further into software applications and tools for Reality Cloud, its own streaming platform that launched earlier this year.

The company is headquartered in Helsinki, Finland — founded and run by longtime veterans from Nokia, the once-dominant smartphone and mobile maker when that company went into a tailspin last decade — and its backers in this round include several big investors. Outside the area.

They include EQT Ventures, Atomico, strategic backer Volvo and Lifeline Ventures, with new backers Mirabad and Foxconn also participating. Varzo described the latter two as strategic: It’s not clear how the Swiss finance and banking giant will work with Varzo, but Foxconn is being tapped to help make its equipment, CEO Timo Toikkanen said in an interview.

Varzo is not disclosing a valuation, but data from Pitchbook says its last round in 2020 valued it at $146 million and that Toikanen (who led Nokia’s mobile phones business before and after Microsoft’s acquisition) is the new valuation. “Very positive.”

In a hardware landscape dominated by big tech companies — especially in VR — Varzo is notable as an independent player, and unlikely to raise much cash to stay that way: It’s only raised about $150 million since its founding. 2016. Toikkanen declined to say whether others approached Varzo for an acquisition, but given his Nokia background, I’d hazard a guess that he and others on the team understand firsthand the value of remaining a small company. innovation

“We love what we do at this scale,” he said. “Independence has great benefits. We move fast and have the ability to respond to customer needs.

Several players in the XR space are focusing on headsets and applications for consumers, and some argue that the quality of those efforts has been variable: Meta was roundly mocked when Mark Zuckerberg previewed its Horizon Worlds expansion; Others are making efforts to improve the experience. And there are also a number of companies that have put money into the B2B market (among them Meta Building Enterprise Applications, HP and ByteDance-owned Pico), though even in that area, some have shied away from other areas, such as Spatial. “The Metaverse.”

On that spectrum, Varzo was among those who took the position early on that the first (and perhaps main?) adopters of XR products would be enterprise customers, and it has stuck to it. Its focus is on producing premium, business-critical services and devices (and thus less sensitive to pricing), and taking an approach where virtual and augmented reality converge into mixed reality. Toikkanen believes that foresight is integral to its success.

Unmodified capture shot through Varjo XR 3 – Autodesk VRED streaming from Varjo Reality Cloud

“We’ve never been a ‘hype’ company,” he says in an understated, Finnish clip. “We have been very consistent in saying that the entry point from the beginning is mixed reality. Ultimately everything is built that way. We also told how good the ultimate avatar will be in real life. A pixelated holographic will never be enough.”

The company currently makes three different headsets — the XR-3, VR-3, and Aero — priced from $6,500 to $1,500, respectively, with additional costs for software subscriptions to use with them (starting at about $1,500 a year), as well as separate development environments for its Reality Cloud. And it’s another next-gen product called Teleport that’s still in alpha.

These days its focus is on applications in areas such as design and manufacturing, engineering, education and healthcare, and in addition to Volvo, its customers include Lockheed Martin, Boeing, Aston Martin, Kia – a total of 25% of the Fortune 100. , the company said — as well as “various departments in the United States and European governments.”

Founding Urho Kontori, another Nokia alum, is still on board as CTO of Varzo, a startup that also owns seven patent families related to the XR.

“Varjo is very intellectual property-protection oriented,” Toikkanen said, noting that the company has been approached by other tech companies to license that IP, but that it has yet to develop that business. “Today the focus is on building this into our own products and services. This is the way you can access it. “

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