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With virtual reality now seemingly everywhere, it’s easy to think that the technology came out of nowhere. Facebook’s $2 billion acquisition of Oculus Rift two years ago opened the floodgates. HTC and Samsung have headsets on the market, too, and Sony will release one later this year for the PlayStation 4 console. And each of these devices is now surrounded by an ecosystem of software, hardware, games, and content. It’s easy to see all that’s happpened in hindsight, of course. But less obvious is the role that early investors have played in the adoption of virtual reality, and how far it has yet to go before truly entering the mainstream.

VentureBeat talked to Brandon Farwell, a partner at Rothenberg Ventures, at the recent F50 Global Summit Conference. For a relatively small firm, Rothenberg may be having an outsized impact through its River Incubator, where 13 entrepreneurs received $100,000 funding last year. According to Farwell, the firm has made about 100 investments in total, with 30 of them falling into the “frontier categories” of technology like AR, VR, AI and drones.

Rothenberg’s portfolio includes Altspace VR, which brings a social dimension to VR. Rothenberg participated in the company’s $5.2 million seed and $10.3 series A fundings, according to VB Profiles.The company ‘s premise seems to be that everything is more fun when you do it with friends – including VR. Our conversation with Farwell took place after a presentation by Eric Romo, CEO of Altspace VR. Here’s an edited transcript of the conversation.

VentureBeat: To the quick: Rothenberg Ventures. Three years old. Done about 100 investments so far. 30 of them, including Altspace, have been in VR, AR, AI – what you call frontier technologies. What did you see three years ago?

Brandon Farwell: We had the distinct pleasure of meeting Eric [Romo] and trying Altspace’s products a year and a half, two years ago. We were blown away. We realized that virtual reality had platform potential, like investing in the internet in 1996 or investing in mobile in 2007-2008. These technologies have the potential to influence consumer-facing applications as well as enterprise. An interesting social fabric within that is what Altspace is building. How can you make it possible for people in VR environments to engage with one another, even though some people are in other parts of the world and others are here? You can have a full 360 immersive social fabric that’s completely novel. As Eric attested to earlier, it’s hard to do that in front of a computer. It’s a fixed, flat opportunity. With VR you have a full 360-degree immersive experience.

VB: You said ‘within VR’—you’re painting a very broad, horizontal view of the landscape. How do you think about though as an investor? Are you concentrating on hardware, software, or consumer-facing experiences?

Farwell: Right. We’ve made investments across the infrastructure layer, application layer, and also on the analytics layer. We’ve also made investments on the hardware side. We invested in a company called called Fove out of Japan. They’ve created their own headset that does extremely powerful eye tracking in VR. That’s a very difficult problem to solve, how you can understand where the individual in the VR environment is looking. Brands, marketers, folks can present content dynamically based on where people are looking. They have their own headset–

VB: So sort of like Google Trends with predictive abilities, but within VR?

Farwell: Right. It builds a heat map of where people are looking and how much time they spend looking in certain environments. It’s really interesting to talk about in relation to marketing and brands.

VB: What’s been the average size of your investments?

Farwell: Anywhere from $100,000 to half a million. We can scale that up as well for certain companies.

VB: You mentioned a Japanese company. Where have your firm’s investments been taking place?

Farwell: We’ve had the fortune to have a global approach with our investment profile. We launched a program called River at our fund. It started in October 2014 and actually launched in January 2015. It was the world’s first virtual reality-focused accelerator program inside of a fund. That class of 13 companies had representation from Asia, Europe, the United States, Canada, South Africa—it was a global purview. We believe that VR isn’t just going to be a Silicon Valley phenomenon.

VB: Do you think there will be a geographical, clustering effect for VR? Fintech concentrates in London or here.

Farwell: We see some of the early applications in gaming. A lot of those companies, as well as studios that produce content, are down in Los Angeles. We’ve seen a concentration down there.

VB: When I go around looking at startups and talking with entrepreneurs, one of the topics is around a funding downturn. They tell me that VCs these days have short arms and thin wallets. Is that true? Or is VR insulated from this frosty environment?

Farwell: That’s a good question. As a fund we focus on frontier technologies – virtual reality, augmented reality, artificial intelligence, drones, space 2.0, robotics, mission-running applications within AI. The demand within the venture community, especially at the seed level, for those types of technologies is only getting stronger. We’re seeing a lot of interest at the seed stage, and the large institutional funds are starting to get excited about AI and certainly VR, too. The funding environment is a lot more compelling for those technologies.

VB: Is that why the institutional funds are coming in? Is there a connection to the big bets that Samsung and Facebook and HTC have made? Do people see an exit, that there’s an M&A ecosystem evolving and they’re trying to get out in front of that?

Farwell: I think there will be a couple of big splashy VR exits within the next year, year and a half or so. We already had Facebook and Oculus, and there have been some smaller ones as well. But I think there will be a couple of $100 million-plus exits that will materialize as the OEMs release their products out into the wild. We’ll see some consolidation and some M&A – buying technologies, buying a piece of the stack, whether it be things like real-time 3D stitching—a lot of folks are working on that right now. It’s a huge problem.

VB: What about the opportunity—when does it actually go mainstream? We were joking before that if you want to take VR portable you need a powerful laptop and a backpack and a headset. You’d look like an astronaut. What’s it going to take? What’s the tipping point?

Farwell: I think it’s cost. The ability to have a headset that’s not only comfortable, but affordable. We talked about cost. The mobile experience is still, right now, compelling with the GearVR headset and also Cardboard. You have accessibility out there for anyone with a smartphone to have a 360 experience with VR that’s really powerful, when you’re talking about applications for education or training.

VB: Are these consumer or business apps?

Farwell: They can be consumer. They can be business apps. There are educational applications. They can be games. It opens up people’s perspective and what’s possible in their lives. Hopefully they get much more out of a 360-degree medium.

VB: We talked about layering a social element into VR. I know you’ve invested in another company called Rival Theory, which is layering AI into VR. Can you describe that?

Farwell: Of course. We were fortunate to back a company called Rival Theory in our second batch of River graduates in December. Our next batch will be coming in April. They’re applying an artificial intelligence technology in a VR environment, so that the character you’re engaging with in VR learns about what you’re saying and what you’re doing. They can also tell where you’re looking, so they can understand more about you and engage with you in a VR environment. You could have that social piece without having someone else with you necessarily. It’s a sort of smart character within VR. Think about how that could affect film and personalization of storytelling or education.

VB: What else, beyond AI, beyond social—where can VR go, if you had to predict five years out? I know it’s not going to look like it does today.

Farwell: I hope not.

VB: (Laughs.) But what might it look like?

Farwell: I’m really excited about the health care applications within VR. Two companies to mention there. One is called Psious, based in Spain. They’ve figured out a technology for allowing therapists to use VR to help their patients overcome any kind of phobias or PTSD issues. When you’re in a full 360 environment—right now the status quo is to try and relive this environment. “Close your eyes…” No. Let’s actually simulate this situation in full 360 and help you overcome your fear of heights, or overcome your fear of public speaking or driving or what-have-you. This is through a medium that’s affordable, that’s full 360 immersive—using immersion therapy you can help overcome that, which is really powerful. Deep Stream is using that with pain, helping people overcome pain by using VR for pain therapy. There’s also industrial training, helping people learn certain skills on the job using full 360. It can certainly help in education.

VB: It sounds like we’re stretching a little bit into AR as far as job training. It seems that in some ways there’s an easier path to adoption for AR in say a warehouse, with Google Glass or some similar digital overlay, as opposed to building a whole environment in VR.

Farwell: We’ve seen a lot of companies using AR in an enterprise setting, be it in a warehouse or in a training session for a deskless worker to have a digital overlay. It might be maintenance on a wing that Boeing’s trying to figure out. You are starting to see full 360 being used to help companies train their employees to come up to speed much quicker using a device like Glass.

VB: Right now, some people in the media tend to group VR and AR together, but they are very different. Are they going to become even more divergent? Will they stay parallel or even merge?

Farwell: We see these as two different technologies in how we invest in them. VR is still an environment where you’re fully immersed in a new medium, as opposed to still seeing the world around you. For now I do see these as two different technologies. We’ll see how that evolves.

VB: Thank you.

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