The virtual reality market is on the brink of exploding, with worldwide revenues from virtual reality and augmented reality predicted to be over $162 billion in 2020.
Now is an ideal time for startups to get into this booming industry, but just because a market is ripe for newcomers doesn’t mean success is guaranteed.
We spoke to Stefan Pernar, managing director of Virtual Reality Ventures, about some of the things startups can do to prosper in this rapidly-growing industry and get their piece of the lucrative virtual reality action. The following conversation has been lightly edited for clarity.
StartupNation: How much room is there in the virtual reality (VR) industry for startups at this stage?
Pernar: There’s still a huge amount of room. I think there’s room for a hundred-fold increase in the market, just based on the fact that Samsung has recently reported that they have sold about five million Gear VR headsets. That’s a relatively high number in terms of where the market is at now compared to where it was a couple of years ago. But if you compare it to where the market can go – in terms of hundreds of millions of headsets at some point in the future – it’s very much in the early days.
StartupNation: What should VR startups have in the fronts of their minds when developing their products?
Pernar: The need to follow the standards for proper VR applications to make sure that people who try the technology have a good experience. What can happen if you’re not careful is that you can develop a VR app, and if you don’t take into consideration the special requirements of immersive applications, you can create an app that makes the user extremely dizzy or even sick. So that’s probably the number one thing that you need to consider.
If you want to try your hand at something a bit more innovative, then go with immersive sound (binaural audio), as well.
StartupNation: Are there industries that VR startups may not be thinking about now, but could potentially be very profitable over the next decade or so?
Pernar: I think there are some interesting applications in healthcare that people are not considering. Healthcare is definitely an important area. I would also say training and education is probably one the highest potential industries.
StartupNation: Are there marketing challenges unique to VR that startups should be aware of?
Pernar: The marketing side of things is relatively straightforward, but it doesn’t hurt to do a fair bit of sales. That’s something we have experienced: you can have a great product, but if you don’t back it up with a good sales effort then you are going to lose out to people who don’t have such a good product but are focusing more on sales.
Demonstrations are also very important. If people haven’t tried virtual reality yet, then they really don’t know what it’s all about, what the impact is on them. But as soon as they put the headsets on and have a bit of a go, that’s when their mind starts to race, and they really understand what this technology is all about. They’re often very surprised by the experience.
StartupNation: Do you have any tips for VR startups on how to pitch to investors?
Pernar: I would probably back up the presentation with industry research showing how many headsets have been sold, what the projections are, just in case the investor is not aware of where the industry is going.
StartupNation: VR technology is moving ahead in leaps and bounds. How important is it for startups to stay on top of the latest industry news and developments?
Pernar: It is quite important. But if you try to chase the latest and greatest in technology, you risk losing focus on your product because with your product you have a certain vision, and that vision can be achieved with a certain set of technologies. If you always try to switch technologies to stay on top of the latest developments, you might end up wasting resources. So stay focused is the message.
StartupNation: Would you like to add anything else you think will help VR startups to improve their chances of success?
Pernar: Ideally get a good budget together, and get together with someone who can advise you from a business coaching perspective. I think by now it’s obvious that virtual reality is the next big thing, but recognizing a trend like that and successfully executing a business idea, they’re two different pairs of shoes.
Also, don’t underestimate how much money you will need to execute your idea. If you can’t afford to be self-sustaining for at least three years, don’t even try to go into the business.