Alibaba makes metaverse bet in China’s magic leap rival

By Zheping Huang

Alibaba Group Holding Ltd. led a $60 million investment in Chinese augmented reality glasses maker Nreal, joining rivals Tencent Holdings Ltd. and ByteDance Ltd. to stake a claim in the future of the metaverse.

The ​​so-called Series C+ funding round brings the total Nreal raised within 12 months to $200 million, the Beijing outfit said in a statement, without disclosing its latest valuation. The startup was valued at $700 million in a previous round announced in September 2021, CNBC reported at the time, citing an unnamed source.

Alibaba’s investment follows similar moves by other Chinese internet giants eyeing the metaverse, a potential future version of the internet that blends aspects of virtual reality, social media and other digital technologies. Last year, TikTok owner ByteDance bought virtual reality gear maker Pico, and Tencent is nearing a deal to acquire gaming handset startup Black Shark, Bloomberg reported in January.

Nreal was founded in 2017 by Xu Chi, a former engineer with American AR startup Magic Leap Inc. In 2019, Magic Leap filed a lawsuit against Xu, accusing him of stealing the company’s secrets, but a U.S. judge later ruled in Nreal’s favor and the case was dropped.

Alibaba invested in Magic Leap as early as 2016, when the company was among the most highly touted U.S. startups, with backers such as Alphabet Inc. But the Florida-based company struggled to sell its consumer headset and has since pivoted to enterprise services.

Nreal now has nearly 400 employees and has sold its glasses through carriers including Verizon Communications Inc. in the U.S., the startup said. Its investors include big-name venture firms and other tech giants, such as Kuaishou Technology, iQiyi Inc., Sequoia China, Hillhouse and Jack Ma’s Yunfeng Capital.