Startup leaders across the 27 AR/VR sectors in Digi-Capital’s Augmented/Virtual Reality Report and Deals Database raised $1 billion in the fourth quarter before the end of November. This is only the second time the billion dollar figure has been reached in a single quarter. Three quarters of a billion dollars went into big deals like Magic Leap’s $502 million and Niantic’s $200 million, with VCs investing another quarter of a billion dollars into smaller rounds. AR/VR startups have raised $2.5 billion since the start of January 2017, equaling the record for AR/VR investment in a single 12 month period (with 5 weeks left to go in the year).

By sector, one third of all investment went into AR/VR tech since the start of the year. Just under a quarter of funds raised went into smartglasses, primarily because of Magic Leap. Games took more than $1 of every $10 raised, with AR/VR navigation, photo/video, peripherals, entertainment and social startups also raising significant amounts. The remainder of investment was spread more broadly across startups in AR/VR advertising, art/design, business, eCommerce, education, enterprise/B2B, lifestyle, location-based, medical, music, news, solutions/services, sports, travel/transport, utilities and VR headset sectors.

The range of VCs investing into AR/VR startups went from small, early-stage specialist funds to global megafunds with billions under management. While AR/VR is still a very early stage market, the emergence of mobile AR and more advanced computer vision/machine learning has brought a broader range of investors to the space (even though Digi-Capital’s discussions show that AR/VR remains frontier tech in the minds of most VCs). The cooling of VC investment sentiment in VR earlier this year has now been counterbalanced by AR (particularly mobile AR) focused thinking.

ARKit, ARCore and Camera Effects could have 900 million installed base by the end of next year (over 3 billion by end of 2021), but it could still take mobile AR startups another 12 months to scale in revenue terms. The early stage of the market means that VCs’ typical 3 to 5 year time frame is about right for investments being made today, as we are still at the earliest stages of what the market could become. Long-term dominant players should emerge to cash in their golden augmented tickets, but that might not happen before 2019.