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Chinese AR glasses firm Nreal raises $100 million in new funding


An attendee tries a pair of Nreal mixed-reality glasses at the MWC Shanghai exhibition in Shanghai, China, on Tuesday, Feb. 23, 2021.

Getty Images GUANGZHOU (China) — Chinese AR glasses manufacturer Nreal raised $100 million for international expansion and new product development.| Bloomberg | Getty Images

GUANGZHOU, China — Chinese augmented reality (AR) glasses maker Nreal has raised $100 million to fund international expansion and develop new products.

Augmented Reality is technology that allows digital images of the real world to be superimposed on it. This technology is being pursued by some the most prominent technology firms in the world.

CNBC has learned that Nreal’s funding round is worth $700 million. This was according to a source with direct knowledge. This person wasn’t authorized to discuss the valuation publicly.

Nreal did not comment on the valuation.

Chi Xu (CEO of Nreal) stated to CNBC that Nreal plans to use the funds for research and development, as well as increasing its global footprint.

Xu explained that China was a large market. “We plan to go into China next year and the USA and possibly other countries.”

Nreal has not launched its AR glasses in China yet, but its flagship product — the Nreal Light — has been retailing in a handful of markets including South Korea, Japan and Spain.

Nreal Light, a lightweight pair of glasses that connect to smartphones, is the Nreal Light. Mixed reality apps allow users to experience digital images overlayed over real life.

The start-up’s backers include a number of major investors including Nio Capital, the investment arm of electric carmaker Nio as well as venture company Sequoia Capital China.

Xu called Nio Capital a strategic investors and saw a possibility for both companies to cooperate.

“Having AR (electric cars) and AR (augmented reality) can make it very exciting going forward. There’s one thing I know (of is that there will be more of them on the streets). AR combined with the car will open up a whole new world of possibilities. People will be spending more time in cars.

New product launch

Xu said that Nreal will introduce a new product next week and couldn’t give too many details ahead of its launch.

But, the CEO revealed that Nreal’s new product will feature a completely new design. It will be lighter and more comfortable than its current Nreal Light model and it will also cost less.

“This product with a lower price point, this can be much easier to penetrate those other markets, like China … and elsewhere,” Xu said.

The new glasses are still compatible with a mobile phone, and Xu is hopeful that people will use them on a regular basis because of the improved features.

Augmented reality is a hot topic among tech companies around the world.

Apple CEO Tim Cook has called AR the “next big thing” and the iPhone maker is reportedly working on a headset. FacebookMicrosoftGoogle and other technology companies are all investing in augmented reality too.

Xu stated that he is open to the challenge from these giants. “I feel that the greatest product will win,” said Xu.

New business models

Nreal has its own operating system called Nebula that runs on its headsets. App developers have the ability to create Nebula apps, similar to Apple iOS for iPhones. These can then be used via Nreal headsets.

Nreal wants to recruit developers on Nebula to create compelling AR apps. The platform currently hosts 8,000 developers.

Apple’s business model is based on taking a 15%-30% cut from gross sales of apps downloaded through the App Store. It does this to generate some of its services revenues.

This model is now under attack. Developers weren’t allowed to directly charge customers for their in-app purchases. They had to use Apple’s app payments system. Apple was then entitled to a percentage.

Epic Games, developer of “Fortnite,” filed a lawsuit against Apple in August 2013. This month, a judge issued an injunction that said Apple can’t prohibit developers from providing links or other communication directing users away from Apple in-app purchasing.

We have seen a lot more changes in Apple’s business model. Xu stated that people will rethink their business models after the Epic and Apple lawsuit.

We should provide a more welcoming business model for developers.”

According to the CEO, this would reduce Nreal’s commissions for app stores. The CEO said that it could lead to more development services, like marketing or helping to improve products.

Xu described it as a win-win situation.

While Nreal is focusing on expanding products and countries, Xu told CNBC in a July interview that the company is looking to go public within five years.