Startups in the Natural User Interface sector raise $676M during the last three years
According to the Tracxn Report on Natural User Interface (NUI), more than $880M has been invested in the sector since 2010 in 190 rounds of funding. The report defines NUI as systems for Human Computer Interaction where the user operates through intuitive actions related to natural, everyday human behavior spanning across six major categories namely Speech Recognition, Touchscreen Interfaces, Gesture Recognition, Eye Tracking, Haptics and Brain Computer Interface.
The report finds that the NUI space has been an extremely active, seeing investments of ~$800M in the last 5 years, with Intel Capital, Andreessen Horowitz, Horizon Ventures and Qualcomm Ventures being among the investors interested in the space. The past three years, in particular, have been extremely lucrative, with the 2013-2014 timeframe seeing startups in the space raise a total of $676M.
2015 contributed to a majority of the funding, seeing a peak at $244M. Another positive sign for the sector is the increase in the average funding ticket size signifying maturity within the sector. Notable rounds during the year include Navdy’s $20M raise in its Series A from Wareness, Upfront Ventures, Formation 8, Eniac Ventures, Qualcomm Ventures and Promus Ventures. Ultrahaptics also raised $16M in its Series A from Woodford Investment Management, IP Group Plc. Viv Labs raised ~$30M through 3 deals with Iconiq Capital, Horizons Ventures, Pritzker Group participating across various rounds.
With funding activity hitting all-time highs every year, it is not surprising that the sector has proved extremely lucrative for new startups in the space. It is important to note that Natural User Interface is a resultant of the continuous evolution of user interfaces, from Command-Line Interfaces to Graphic User Interface (GUI) to Natural User Interface (NUI). The sector has the presence of technology stalwarts like IBM, Intel, Google, Samsung, Qualcomm, Apple and Microsoft making a significant number of acquisitions in the space enabling the technology reach mass markets, thereby making it imperative or the startups to continuously innovate in the space. This need for constant innovation has led to the sector seeing a non-uniform trend in the number of companies being founded in the sector.
The highest number of companies were founded during the 2012-2013 timeframe, with 2013 seeing a peak with 44 new companies. With the aforementioned increase in ticket size during the last two years, the surge seen in the companies founded during 2012 and 2013 has been justified. And with early stage funding still coming in at a steady rate, there are more positive signs presented to new entrants in the space.
At the same time, late stage funding is still moving at a steady rate, though not reached a high, indicating that there is still some time for the sector to mature. 2014 was a stellar year in terms of early stage rounds and late stage rounds seeing a peak. It is also important to note that most of the late stage funding has gone into Speech Recognition and Touchscreen Interface segments.
Business Models in NUI
Within the NUI sector, Speech Recognition, Touchscreen Interface and Gesture Recognition have been the top funded sectors.
Speech Recognition is the largest sector in terms of funding as well as revenue, with prominent companies including Nuance Communications, Siri (now a part of Apple), Artificial Solutions, Expect Labs and VoiceBox Technologies. Advancement in Artificial Intelligence has played a pivotal role in the emergence of market, and the market has evolved from Voice Recognition (used in Biometric Authentication) to basic voice-controlled commands to conversational interfaces.
The segment has so far received a total of $436M, with $141M coming in during 2015. The segment has been successful in terms of exit activity as well with about 10% of the companies in the sector being acquired companies by giants like Facebook, Apple, Amazon and Yahoo.
The Tracxn Report on NUI report covers three types of companies:
- Companies which provide technology to create Natural User Interface for end users – Covered under Technology Provider for each major Business Model.
- Companies which create Natural User Interfaces using their own technology – Covered under Applications for each major Business Model.
- Companies which create Natural User Interfaces using third party technology but the product’s primary offering is a Natural User Interface – Covered under Applications for each major Business Model.
Preview the NUI Report here:
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