Bengaluru-based deep tech startup Avataar.me that uses augmented reality (AR) and virtual reality (VR) to create immersive shopping experiences, said Thursday it has raised USD 7 million in its Series A round from Sequoia Capital India. The company said the fresh funding will be used in research and development for new products.
The company has raised a total of USD 10 million so far including a USD 3 million seed round from angel investors last year.
Founded in 2016 by management graduates Prashanth Aluru, Sravanth Aluru, Gaurav Baid, and Mayank Tiwari, Avataar is a B2B2C company that works with enterprises to help them create 3D and life-size versions of two-dimensional images to give their customers an experience of virtually being present in a store. It spent four years developing the product and launched it last year for commercial use.
The platform currently works with companies in e-commerce, consumer electronics, auto manufacturers, and the FMCG sector in the US, India, and Southeast Asia. According to the company, its clients’ conversion rate has doubled after using the AR technology, compared to the time when they were using 2D videos of the same product.
“AR/VR has shown strong emotional connect with GenZ and younger millennial consumers, a segment that brands have struggled to engage with in recent years and a segment that has far more spending power today than they did five years ago,” Sravanth Aluru, CEO of Avataar.me, said in a statement.
As footfalls in shopping malls dipped by 77% in the last two quarters due to COVID-19, the company expects an increase in demand for contact-less shopping experiences. According to a report, Indian AR and VR industries are poised to grow to USD 5.9 billion and USD 0.5 billion, respectively, by 2022. The report said India is set to emerge as one of the largest suppliers of the global immersive technology demand.
While the report sounds promising, the use cases in the consumer-facing industry are far and few. In 2017, Flipkart’s fashion portal Myntra had tried its hands with augmented reality on its app that allowed users to virtually try clothes on before purchasing. However, the company seems to have taken it off. Online eyewear company Lenskart uses AR on the app and its website which gives buyers the freedom to virtually try on different glasses.
“In 2019, more than 300 million users were actively using AR. Spends on AR tools for creating social engagement for brands along with ‘try-before-you-buy’ experiences is expected to grow 10x by 2023. Undoubtedly, the time for AR/VR is now, with ecommerce being one of the broadest applications,” Shailesh Lakhani, managing director, Sequoia Capital India, said in a statement.