Saudi Arabia took control of The American augmented reality company Magic LeapThe Telegraph can reveal, as the company appeals to investors for another $450 million.
Magic Leap, which has raised more than $4 billion in debt and equity funding but has never turned a profit, has grown a pair of glasses designed to impose virtual images through the real world.
Despite raising funds from Google, China’s Alibaba and US telecommunications giant AT&T, Magic Leap is struggling to realize its vision of high-tech digital glasses. At one point, it was valued at over $4 billion.
Founded in 2010 by American entrepreneur Rony Abovitz, the company caused a stir in 2015 with a teaser for its augmented reality glasses that sparked renewed consumer interest in the company.
Florida-based Magic Leap has teamed up with New Zealand’s Weta Workshop, known for its motion capture work on Lord of the Rings films, on games for its headset. Video games for his augmented reality glasses included Dr. Grodborts Invaders, with the voice of Stephen Fry.
However, its product, the Magic Leap One, saw only modest sales when it went on sale in 2018. The company cut more than 1,000 jobs during the pandemic.
The headset’s successor, the Magic Leap 2, went on sale in September this year in a bid to rekindle interest. The headset costs $3,299 and is aimed primarily at industrial customers. The new helmet is often used by companies to visualize design or construction work or by health professionals who can use the headset for surgical planning.
According to its European division’s deferred accounts, Magic Leap has raised $150 million in convertible preferred stock and $300 million in debt “to date in 2022.” Funding was not previously disclosed. It follows a $500 million increase in 2021.
In its recent funding rounds, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), took a more than 50% stake in the company, giving it overall majority control. The accounts stated, “As of November 2022, the PIF has the right to appoint four of the eight directors to Magic Leap’s board of directors.”
As of August, it had $223 million in cash and continued to seek new investments.
Saudi Arabia previously led a $400 million funding round for Magic Leap in 2018.
Other tech companies are also spending billions of dollars trying to make augmented and virtual reality devices mainstream.
Mark Zuckerberg renamed Facebook to Meta last year and unlocked tens of billions of dollars on “the metaverse”, a wacky concept for creating a 3D Internet using immersive virtual reality. Meta intends to spend 20% of the costs next year on the project.
Meanwhile, iPhone maker Apple is reportedly working on a pair of augmented reality glasses and a virtual reality headset, which could be revealed in 2023.
Peggy Johnson, who became Magic Leap’s general manager in 2021, said this month: “At Magic Leap, we believe the metaverse is already here, and many currently have a limited view via phones, computers and tablets. Our goal is to make our interactions with the metaverse a more natural extension of how we see and operate in the physical world.
Magic Leap did not respond to requests for comment.