So How Much Is Magic Leap Really Worth?

What’s going on in Magic Leap? And how does it affects the company’s valuation? In this post, we’ll answer these questions, by laying out the good, the bad and the ugly about the company.

Magic Leap is creating a wearable mixed reality platform which can project 3D computer-generated images over real-world objects. The company claims that its mixed reality platform achieves a better resolution than others, with a new proprietary technique that projects an image directly onto the user’s retina. That is supposed to be done by using embedded multiple structures inside the device that leads the light through a waveguide medium to a point in the field that creates an illusion of a 3D model. Think of millions of prisms inside a headset, each brings the light to a whole different point in the air.

The vision, together with impressive demos done in a refrigerator-sized device, brought big names such as Google, Andreessen-Horowitz, Qualcomm, Kleiner-Perkins and Alibaba to invest a total of $1.4 billion in the company, giving it a valuation of $4.5 billion last year.

Magic Leap has invested in a highly experienced team and has brought on board the likes of science fiction author Neal Stephenson and Richard Taylor of Weta Workshop. The company has partnered with Weta Workshop, the VX studio behind Lord Of The Rings, and with the Star Wars franchise to produce VR content. The buzz intensified with every financial round, and the so was the mystery around the company that grew each time the CEO gave an interview to leading magazines without disclosing too much.

There is currently only a handful of individuals who have seen the product under a non-disclosure agreement, so it has yet to be determined what form the complete platform will take. However, revealed last month that much of the demos were created by CGI and that the product development is lagging behind that of Microsoft’s Hololens. The news outlet also interviewed Magic Leap’s CEO Roni Abovitz and had some demos that had left it with an impression that the final product is very far from being ready.

The article was pivotal in dissolving the magic behind Magic Leap, and in revealing the troubles the company is facing when miniaturing a refrigerator sized device into a headset. In response to the article, investors have slashed the price they’re willing to pay for Magic Leap stock in the secondary market by about 20%, The Information reported.

What is Magic Leap’s Valuation?

The drop is not unique only to Magic Leap, as many unicorns are already suffering from a discount to the last fundraising round. According to the report, Magic Leap’s valuation was estimated at $5.7 billion in the secondary market last November. The discount brought the company’s worth to $4.3 billion, almost back to the valuation it had at the end of 2015. But Zirra, a company that analyzes private tech companies using AI and machine learning had already come to the approximately the same number. Zirra estimates Magic Leap’s current valuation at $4.1-$4.2 billion, while the chances of exit are rather small, no more than %30-%40. [Read here for Zirra’s spotlight report on Magic Leap]

magic leap valuation zirra

Magic Leap didn’t remain silent following the criticism. The company announced it would open a 260,000 square-foot facility in South Florida which would manufacture the devices, and will recruit 725 new employees. Looking at Magic Leap’s total employee count timeline in LinkedIn, the company is on a growth track, and it seems unstoppable. The technical challenges, however, didn’t bring its hiring to a halt.

The two biggest unknowns regarding Magic Leap are still the timing of product launch and its advantages over other existing AR technologies such as Hololens or Lumus. Magic Leap’s brand and awareness are still very low, even when comparing to current VR platforms such as Oculus Rift ant HTC Vive.  If the company can succeed in getting their product to market, Magic Leap could have a significant impact on a variety of industries, including education, entertainment, and healthcare. [Read here for Zirra’s spotlight report on Magic Leap]

Assaf Gilad

An ex-journalist from Calcalist, a leading business and tech news outlet in Israel, I'm now writing about startups for