Magic Leap, the maker of augmented-reality goggles, has already raised $2.3 billion, an extraordinary amount for a start-up. Now it has secured yet another investment — and could raise still more cash.
The company said Friday that it had garnered $280 million from NTT DoCoMo, Japan’s biggest cellphone service provider, as part of a new partnership between them. It will also reopen its most recent fund-raising round to potentially accept even more cash from new and existing investors.
It is the latest move by Magic Leap to build its vision of making its flavor of augmented reality — where people see computer-generated images in the real world, thanks to a special headset — ubiquitous.
That pitch has enabled the company to become one of the best-funded start-ups around. But it also raises questions about whether Magic Leap, which began shipping its headset last year for $2,300, can make good on its promise, especially as it faces competition from technology giants like Microsoft.
Magic Leap has responded partly by forming strategic and financial bonds with big telecom partners that could introduce its technology to consumers and business customers. Last year, the company struck a partnership with AT&T, which now sells the Magic Leap One in a handful of cities in the United States.
By teaming up with DoCoMo, Magic Leap hopes to serve a similar role for another major market. Beyond the ability to expose more potential customers to the Magic Leap One, a forthcoming gigabit high-speed internet service from DoCoMo could help advance augmented reality applications.
“They’re a forward-looking company,” Rony Abovitz, Magic Leap’s founder and chief executive, said of DoCoMo in an interview. “I think this is quite transformational for us and for the country.”
DoCoMo’s funding is also important for Magic Leap as it competes against deeper-pocketed rivals. Microsoft rolled out the second version of its competing HoloLens this year, with an eye on capturing the potentially lucrative market for business users, like factory workers.
Mr. Abovitz said any progress would continue to be expensive. “The R&D investments are substantial, but so is the upside,” he said.
He said the company had previously let expectations for its product run wild. “I think our job is to continue to manage expectations,” Mr. Abovitz said. He added that he believed augmented reality could help lay the road for the next generation of the internet.
In a tacit acknowledgment of the costs of its business, Magic Leap will reopen its Series D fund-raising round. Mr. Abovitz said the company was in talks with more potential investors.
One of its current backers is the sovereign wealth fund of Saudi Arabia, whose government has drawn criticism for its role in the killing of the journalist Jamal Khashoggi. Mr. Abovitz declined to comment on the Saudi sovereign wealth fund.
Orignially published in NYT.