China’s augmented reality startup Nreal is on a roll. The company, which hopes to bring AR to the masses by making bright-color, lightweight smart glasses, has just received $60 million in a Series C extension round, bringing its total funding in the last 12 months to a handsome $200 million.

The new investment is led by Alibaba, which has historically been a more hands-on but less active corporate investor than its archrival Tencent. The Chinese e-commerce giant has a reputation for acquiring controlling stakes in startups that can potentially be a complementary piece to its giant retail ecosystem.

Alibaba’s investment in Nreal, however, is purely financial. In theory, the two could have generated strategic synergies. One could easily imagine Alibaba hooking Nreal up with its gaming and video streaming units, or even having it develop smart glasses for its millions of food delivery riders — who recently began wearing voice-controlled helmets. But with the onset of China’s antitrust crackdown, the country’s tech behemoths have no doubt become more cautious with any investment that can be perceived as encouraging unfair competition.

Plus, Nreal, which was founded by Magic Leap veteran Chi Xu, already has a club of notable partners. Some of its strategic investors are Chinese electric vehicle upstart Nio, short video app Kuaishou — TikTok’s nemesis in China and Baidu-backed video streaming platform iQIYI. Qualcomm is not an investor but supplies cutting-edge Snapdragon processors to the hardware maker and works closely with it to build a developer ecosystem. Nreal is also backed by renowned institutional investors, including Sequoia China, Jack Ma’s Yunfeng Capital, Xiaomi founder Lei Jun’s Shunwei Capital, as well as private equity giants Hillhouse, CPE and CICC Capital.

Despite being China-based, Nreal hasn’t targeted its home market but has instead first tested the consumer appetite in six overseas countries, including Japan and the U.S. The smart glasses maker has relied on partnering with local carriers to tout its devices. In the U.S., for example, Verizon is helping to sell Nreal’s mixed reality glasses Light, which has a relatively affordable price tag of $600 and can be plugged into a 5G-compatible Android device.

With the proceeds from its latest round, Nreal will finally make a foray into China this year. The funding will also be spent on R&D and growing its ecosystem of content and apps, which will be critical to user adoption.



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