AltspaceVR, one of the pioneering social spaces in virtual reality, has been forced to close down due to its parent company being unable to find investment.
The California based startup was founded in 2014, but it didn't release its VR social space until June 2015 - prior to the consumer launches of Samsung Gear VR, Oculus Rift and HTC Vive. The following month, it raised $10.3 million in a series A round, taking its lifetime funding to a shade under $16 million.
However, "unforeseen financial difficulty" will force AltspaceVR to take its social space offline on August 3, because it "can't afford to keep the virtual lights on anymore." In a blog post titled "A Very Sad Goodbye", the company called the turn of events, "surprising, disappointing, and frustrating for every one of us who have put our passion and our hopes into AltspaceVR."
The root of that surprise appears to stem from the fact that AltspaceVR remains popular - in the context of the VR market, at least. The company claimed to have "the record for most people in VR at one time", and the social space still attracts 35,000 MAUs.
"We think [35,000 MAUs] is pretty good for the size of the VR market. The average user spends 35 minutes a day in AltspaceVR, and in big events we typically see around a thousand attendees. We have active developer and event organizer communities and have attracted marquee partners for our events."
In an FAQ following the blog post, the company explained that it was seeking another round of funding that fell through. "Some combination of this deal falling through and the general slowness of VR market growth made most of our investors reluctant to fund us further," it said. "We've been out fundraising but have run out of time and money."
This lack of interest in continuing to fund an apparently popular VR application will be sobering reading for companies still struggling to build their businesses in the "general slowness" of the VR market. AltspaceVR will now attempt to find a home for the technology it created, which it believes could be "foundational to the future of social VR."