2014 was a blockbuster year for virtual reality (VR) with total funding nearing $3 billion - not counting internal investments from companies like Microsoft, Google, Samsung, Sony, and HTC. Including these players, VR funding was somewhere between $3-3.5 billion. VR hasn't had such a good year since the early 90's, so it would be easy to assume that 2015 will be an even bigger year for VR. However, when you take a closer look at where all of the money went, it's hard to imagine total VR funding in 2015 coming close to reaching 2014 levels.
Of the nearly $3 billion invested in VR in 2014, at least 95% was focused on hardware. Oculus and Magic Leap alone account for about $2.5 billion, and the majority of internal R&D funds from the tech titans have also been focused on the hardware side. Unless there is a stealthy, VR-hardware unicorn hiding out there, it's highly unlikely that there will be any single investment in 2015 that matches Oculus, Magic Leap, or internal efforts from the major tech players.
Although the total amount invested in 2015 won't match 2014, we will see many more deals. Outside of Oculus and Magic Leap, only about 15 VR startups saw any significant funding in 2014, which is low given the excitement surrounding VR. This should rise to at least 30-40 deals in 2015 as investors get more familiar and comfortable with VR.
With big name VCs like Andressen Horowitz, Google Ventures, and Rothenberg Ventures leading the charge, we will see the number of VCs and investments in VR bloom even as the total amount invested drops.