Snap yesterday announced the latest iteration of its Spectacles augmented reality glasses, and today the company revealed a bit more news: it is also acquiring the startup that supplied the technology that helps power them. The Snapchat parent is snapping up WaveOptics, an AR startup that makes the waveguides and projectors used in AR glasses. These overlay virtual images on top of the views of the real world someone wearing the glasses can see, and Snap worked with WaveOptics to build its latest version of Spectacles.
The deal was first reported by The Verge, and a spokesperson for Snap directly confirmed the details to TechCrunch. Snap is paying over $500 million for the startup, in a cash-and-stock deal. The first half of that will be coming in the form of stock when the deal officially closes, and the remainder will be payable in cash or stock in two years.
This is a big leap for WaveOptics, which had raised around $65 million in funding from investors that included Bosch, Octopus Ventures and a host of individuals, from Stan Boland (veteran entrepreneur in the UK, most recently at FiveAI) and Ambarish Mitra (the co-founder of early AR startup Blippar). PitchBook estimates that its most recent valuation was only around $105 million.
WaveOptics was founded in Oxford, and from what we know it will continue to be based in the UK.
We have been covering the company since its earliest days, when it displayed some very interesting, early, and ahead-of-its-time technology: waveguides based on hologram physics and photonic crystals. The important and key thing is that its tech drastically compresses size and load of the hardware needed to process and display images, meaning a much wider and more flexible range of form factors for AR hardware based on WaveOptics tech.
It’s not clear whether WaveOptics will continue to work with other parties post-deal, but it seems that one obvious advantage for Snap would be making the startup’s technology exclusive to itself.
Snap has been on something of an acquisition march in recent times — it’s made at least three other purchases of startups since January, including Fit Analytics for an AR-fuelled move into e-commerce, as well as Pixel8Earth and StreetCred for its mapping tools.
This deal, however, marks Snap’s biggest acquisition to date in terms of valuation. That is not only a mark of the premium price that foundational artificial intelligence tech continues to command — in addition to the team of scientists that built WaveOptics, it also has 12 filed and in-progress patents — but also Snap’s financial and, frankly, existential commitment to having a seat at the table when it comes not just to social apps that use AR, but hardware, and being at the centre of not just using the tech, but setting the pace and agenda for how and where that will play out.
That’s been a tenacious and not always rewarding place for it to be, but the company — which has long described itself as a “camera company” — has kept hardware in the mix as an essential component for its future strategy.
Update: In Snap’s 10-K SEC filing for the fiscal year ending Dec. 31, 2021, the company disclosed the following deal terms:
“We acquired Wave Optics Limited (“Wave Optics”), a display technology company that supplies light engines and diffractive waveguides for augmented reality displays. The total consideration was $541.8 million, of which $510.4 million represents purchase consideration and primarily consisted of 4.7 million shares of our Class A common stock with a fair value of $252.0 million, cash of $13.7 million, and a $238.4 million payable due no later than May 2023 in either cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election. The remaining $31.4 million of total consideration transferred represents compensation for future employment services.”