How to Invest in Virtual Reality
You could get virtual reality into your portfolio by the end of this article.
It may seem far-fetched. After all, virtual reality (VR) is a bit less accessible than other tech investments out there.
In fact, fewer than 10% of households in the U.S. have a VR device. But, that hasn’t stopped billionaires like Mark Zuckerberg, Jeff Bezos, and Larry Page from pumping mountains of cash into the industry.
If you are reading this right now, you might be ahead of the curve. Because the people who carefully consider VR before its probable supernova stand to gain the most.
And with a little creativity, you could ride the virtual reality wave from close to the very beginning…
First, let’s define VR.
If you haven’t gotten the Wikipedia-esque summary of virtual reality, here it is:
Virtual reality is an interactive computer-generated experience that takes place in a simulated environment. It incorporates visual, auditory, and other types of sensory feedback.
For many, the conversation about VR ends with gaming. But the tech absolutely has applications in every major industry: education, military, real estate, architecture, and many more.
Virtual reality’s growth could resemble the expansion of the “two-dimensional” graphical user interface for computers. Initially very simple... Then quickly capturing the hearts of gamers... Later moving on to completely change every industry in the world.
That being said, VR is in the “moonshot phase,” where profitability seems likely, but no one has found a silver bullet quite yet. Companies and venture capitalists are still pouring in lots of money to see what works and what doesn’t work.
You might be asking yourself, “Well then, how can I invest in virtual reality?” Without further introduction, here are ALL the ways you can do exactly that...
Types of Virtual Reality Investments
1. Starting A Virtual Reality Business
If you are reading this and you have a brave, self-starter spirit you may want to tackle the virtual reality industry by starting a new company.
With this route, you are only limited by your creativity.
You could buy some VR equipment and produce virtual reality real estate tours. You could make a virtual reality video game. Or you could try to make the first VR conferencing software.
This has worked for people already. For example, there was real estate photographer named Brandt who used virtual reality to go $0 to $500K in annual income in only two years.
The VR revolution needs content to get rolling. And if you’re at the forefront, there could be great profits in it for you.
Keep in mind, the risk associated with starting any business is high, so you better have a solid business plan in place.
But maybe you aren’t looking to hustle a business into existence. In that case....
2. Stocks, Mutual Funds & ETFs
Right now, there are no pure play virtual reality investments or stocks. This means that any company you invest in will have exposure to other industries and technology.
The industry is too young for the average investor to invest solely in VR. This can be a good thing though—if virtual reality takes a long time to take off, you can still profit on other aspects of your portfolio.
So, what can you do to invest in virtual reality stocks right now? First, realize you are early to the game and have plenty of time to research.
One option now is the big, publicly traded, players.
A great example is Facebook (NASDAQ: FB). The tech behemoth bought the Oculus Rift platform and has pumped A LOT of money into creating a virtually integrated VR pipeline. This means they want to own the hardware and software, (similar to the way Apple owns iOS AND the iPhone).
It’s good to keep track of the 800-pound gorillas like Facebook, but there are lots of other companies the mainstream media isn’t talking about. These plays may not be in the news every day, and some of them are not publicly traded yet, but just remember that the little guys are the ones who have the most room to grow.
What about virtual reality indexes or virtual reality investment funds? Right now opportunities are sparse, but there are a few ETFs and index funds that can get you exposure to VR and AR...
Public companies and funds are great for investors who don’t have the option to invest in private companies. But, it turns out the world of private investing is opening up a lot...
3. Private equity
We saved this investment type for last because we think it is the most exciting and game changing...
As of May 16, 2016, you no longer need to be an accredited investor to invest in private companies!
Previously, investors would have to demonstrate an annual income of $200,000 (with some other rules thrown in there) to be able to invest in companies before they go public. This severely limited the average investor.
Now, using a licensed crowdfunding website or “funding portal,” you can get out there and do equity, debt, and revenue sharing - depending on what the company offers.
What to Consider When You Invest
Hardware vs. Software
If you break the virtual reality industry into its two highest categories, you would get software and hardware.
With hardware, you have microprocessors, power supplies, hard drives, and anything else that a normal computer might have. Plus the virtual reality headset or virtual reality mechanism that people would be using. In fact, there is one company that is already producing chips optimized solely for virtual reality...
Software, on the other hand, is all about developing the experience. Whether it’s virtual reality theme parks, video games, conferencing software, or social media.
For the investors out there, we recommend focusing on the hardware. Because of the large barriers to entry associated with hardware, it’s likely that the companies who own the future market share on virtual reality hardware already exists.
VR vs. AR
Augmented Reality (AR) has gained a lot of hype in the last few years as well. And for good reason…
AR is a subcategory of virtual reality, where a processor layers virtual information over a live camera feed into a headset or through a smartphone (think Pokemon Go, Snapchat filters, or the infamous Google Glass).
While there are major obstacles to overcome with both virtual reality and augmented reality, many big names in tech (like Tim Cook and Bob Iger) are more bullish on the latter.
So far this has come down to one major variable… Humans are social creatures. And AR has succeeded—so far—at satisfying the social need. It augments reality instead of replacing it.
That’s probably why Facebook is focused on making VR more social. Their recent “Spaces” app aims to make it fun to spend time with friends in VR.
Right now there’s a lot of debate— so it’s important for you to research (we can help) which side of the technology you think will succeed!
Success vs. Failure
What will make VR creators and investors successful? Understanding WHY people will use the technology.
This will determine which platform will gain widespread adoption. It will be the answer to the question “Which virtual reality hardware will be the next personal computer or iPhone?’
The company that will gain the most from virtual reality might not even exist yet. In fact, it probably doesn’t! But this mystery company WILL CERTAINLY have suppliers and other companies correlated with its success.
You can make you own success story by reading more articles like this one and understanding tech trends.
Summary: How To Invest In Virtual Reality
You can get into virtual reality or augmented reality by
Investing in your own startup company
Investing in stocks and funds with virtual reality exposure, or
Investing in private companies through “funding portals”
Things to think about when investing:
Do you want exposure to hardware or software plays?
Do you want to bank on virtual reality or augmented reality?
Do you understand why people will use the technology?
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