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VR Startup Sandbox completes a new round of funding at US$68 M

Hong Kong-based virtual reality (VR) startup Sandbox VR recently raised US$68 M for their Series A from the Alibaba Hong Kong Entrepreneurs Fund (AHKEF), Andreesen Horowitz, Floodgate Ventures, Stanford University, Triplepoint Capital, and CRCM Ventures. The company will be using the funds to open new VR experiences in New York, Tokyo, and other locations. 

The Alibaba Ventures Fund was launched in 2015, and includes a HK$1 B Hong Kong fund, and a NT$10 B Taiwan fund, aimed at accelerating the growth of tech startups in both locations and to rejuvenate their respective entrepreneurial ecosystems. Gobi is the sole fund manager for the AHKEF. 

To date, Sandbox has been operating in six cities, including San Mateo, California, Vancouver, and Hong Kong. At these locales they provide players with the chance to virtually battle zombies, aliens, and undead pirates in a series of location-based experiences. 

Speaking on the company's vision, Founder and CEO of Sandbox, Steve Zhao, said, "Our goal is to build a holographic deck, like the ones seen on Star Trek." 

When you try the VR experience for yourself, you will definitely find it interesting. The unique product offered is what secured this round of funding for the company. They deliver an unparalleled VR experience to customers -- visitors are provided with VR headsets and high tech backpacks, and are subsequently thrown into a virtual world, whether it's a pirate ship, zombie invasion, or a look at Hong Kong in 2088, everyone receives a truly immersive experience. The journey lasts about one-hour and costs around US$40 per person; bookings can be made online. 

For investment firms, this is also an interesting startup to fund. Although investors' attention to early VR products has recently cooled down, Snadbox still stands out as a unique company that cannot be ignored -- they don't manufacture hardware and software that can be used at home, instead, they create perfect spaces for experiences elsewhere, such as shopping malls and other public places. 

"When I saw it on Instagram, I though that this business could be a real killer," Andreesen Horowitz said. "When you spend such a wonderful time playing the experience and creating videos about you and your friends...people are screaming and running around in a virtual world, which makes the whole outing so interesting that many customers are sharing the news about Sandbox. Once the supporting ecosystem around the company catches up, we expect Sandbox will develop its technology to include narratives, interactions, and body. This truly marks a golden age for this form of entertainment." 

He added that some of these experiences may look like games or movies, while others are similar to musicals and documentaries. There are also other new VR native types that haven't even been invented, just like in the early days of movies, when drama was not a genre. "Beyond that, Sandbox has also solved the problem of acquiring new customers to participate in the VR experience, which I think is very critical." 

"We opened our first experience in Hong Kong in 2017. 60 days after launching, we were running ragged from morning till night," Steve said. At the time, Steve was operating the Sandbox VR system at a very cheap price, but they were also using a lot of expensive VR headware; they had to create software to stitch it together and create the content of the experiences. They were about to run out of money, but now, the company has 45 employees and seven offices in the US, Canada and Asia. 

It is understood that Sandbox is planning to use the Series B funding to expand to new locations and also to create new content for their offered experiences. "We plan to open up in Los Angeles, Austin, New York and Chicago, and we have signed a number of agreements with Westfield Malls across the US," Steve said. 

While investing in new retail locations and content can add significant costs, the Sandbox team believes that its new experiences will offer the same great products to new groups of customers, making the investment worthwhile.