Blippar collapses amid investor dispute, fires all staff

Brief:

Augmented reality (AR) startup Blippar announced it entered administration, a U.K. form of bankruptcy, as part of being liquidated after an investor dispute. The company, whose CEO once claimed he had turned down a $1.5 billion takeover bid as recently as two years ago, fired all employees and likely will end all service, according to a blog post.
Malaysian sovereign wealth fund Khazanah Nasional this month voted against emergency funding from Nick Candy, a real estate developer who participated in an earlier financing round. The vote cut off Blippar’s supply of cash. The company on Dec. 7 said accounting firm David Rubin & Partners was appointed as the administrator, The Times of London reported.
Blippar, which is best known for its AR app that identifies real-world objects, raised $131.7 million in funding in four rounds, according to Crunchbase. CEO Ambarish Mitra, Omar Tayeb, Jessica Butcher and Steve Spencer founded the company in 2011. Blippar employed as many as 300 employees before making cuts to stem losses.

Insight:

Blippar’s collapse is another reminder that company valuations can be fleeting when investors lose confidence in the potential to make money. Blippar was a pioneer in developing AR technology and even had “unicorn” status with a valuation of more than $1 billion. But the market for AR technology has rapidly evolved since Blippar’s founding. AR entered the mainstream with the popularity of mobile games like Pokemon Go and the widespread sharing of face filters on Snapchat. AR headsets like Magic Leap and Microsoft HoloLens aren't mass-market products, but have solid financial backing to refine their technologies for a wider variety of enterprise and consumer applications.

Perhaps the most significant development in the AR space has been the growing support of tech giants, who have created software tools to help a wider group of developers add AR features to their apps. Apple’s ARKit and Google’s ARCore diminished Blippar’s value proposition as an AR innovator in the past couple of years. While Blippar had worked with a number of brand marketers over the past few years, the evolution of the landscape to include big platforms like Facebook, iOS and others means brands have a number of other options for their AR activations.

Blippar wasn’t unusual as a tech startup that faced diminished prospects as bigger and better-financed tech companies developed rival technologies. Apple, Facebook, Google and Microsoft have continually expanded their services and put countless tech startups out of business. That’s why the exit plans of every tech entrepreneur and venture capital fund include some kind of buyout. Blippar was said to have had takeover talks with potential suitors including Snapchat parent company Snap, but a deal was never consummated, Business Insider reported this year.

Blippar's struggles have received plenty of press coverage in the past couple of years, including a report that CEO Ambarish Mitra had embellished his résumé. The company's collapse is the latest sign of trouble for the U.K. tech industry. E-commerce startup Powa Technologies was once valued at $2.7 billion and went bankrupt in 2016. The company created a point-of-sale terminal for retailers and a mobile payment app, but failed to gain customers, the Financial Times reported. Adtech unicorn Ve Interactive last year went into administration and was acquired for a fraction of its prior valuation, Business Insider reported.

Despite the difficulties, the AR industry is forecast to have plenty of market potential. Worldwide spending on AR and virtual reality (VR) will grow 68.8% from this year to about $20.4 billion in 2019, according to estimates from the International Data Corporation. The most popular commercial uses for AR/VR technology next year will be training ($1.8 billion), online retail showcasing ($558 million) and industrial maintenance ($413 million). The industries that will spend the most on AR/VR next year are personal and consumer services ($1.6 billion), retail ($1.56 billion) and discrete manufacturing ($1.54 billion), IDC estimated.