tagSpace follow-on

tagSpace has developed tools to create, share and publish “mixed reality” experiences – quickly and easily. Its cutting edge developer platform, tagStorm, is a turn-key solution for rapidly creating mixed augmented and virtual (AR and VR) experiences. Customers can create custom animated and interactive 3D scenes that play out in the real world – like a classic video games editor, but with the world as a canvas.

Once a scene is complete, it can be placed in any real world location, using the tagSpace web portal. It can then be published as a URL and distributed to an audience, with parameters such as how far away users can witness the creation. End-users view he experiences via the free DiscovAR and Experience apps, allowing creators to gain deep insights into customer behaviour via campaign reach, social shares and popular user location data.

Why Jelix invested

Exploding global market

In 2016, the AR and VR sectors were growing rapidly. Juniper Research estimated annual revenue for AR apps to grow to US$5.2bn by 2017. tagSpace was riding on the front of this wave, developing tagStorm, incorporating the best features of VR and AR together with a unique social media element. tagsSpace was developing a raft of apps changing the way we look at the world across medicine, defence, marketing, travel and games.

Competition

tagsSpace was ahead of the pack. Differentiators were:

It addressed the outdoor space, a burgeoning area of demand, and was the first to blend 3D, interactive computer graphics in wide-scale, real outdoor environments.
It augmented and supplemented existing social media apps including Facebook, Twitter, Instagram and Google+. It was the first to couple location based Augmented Reality and Virtual Reality with a powerful social media platform.
Software patents were already filed for new technologies in this space, with many more in the pipeline.
It was first to market with several new applications in the AR and VR spaces.

Multiple revenue sources

Revenue sources included licence fees per developer per application, a share of product sales revenue, plus upgrades and support fees.

Strong founder

Paul Martin was already an experienced entrepreneur and developer who had co-founded independent videogame development studio Slant Six Games. After 8 years, at 200 staff and with clients such as Sony, Microsoft and Capcom, he saw a successful exit. Earlier he successfully delivered large games software development projects for companies such as Sony and Electronic Arts, prior to founding and heading up Aristocrat’s worldwide core software technologies group.

Team

Paul was experienced in building outstanding teams and the board drew from the advice of Dave Anthony. Dave is best known for his pioneering work on the blockbuster Call of Duty videogame franchise and wrote the screenplay for and directed Call of Duty Black Ops – the bestselling videogame of all time. tagSpace’s technology advisor, Alan Bucior, was an 18-year video game veteran, co-founder of Slant Six Games and a VR and interactive computer graphics expert. He had led tech teams at some of the world’s largest companies, including Electronic Arts.

Jelix Ventures Management Company Pty Ltd (ABN 60 613 582 773) is a Corporate Authorised Representative of BR Securities Pty Ltd (ABN 92 168 734 530) Australian Financial Licence No 456663.

We Know What to Look For

We are experienced angel investors and entrepreneurs who have been immersed in the startup sector for two decades. We’re disciplined, highly selective and have a clear investment thesis.

We look for:

Strong founders & team

The earlier the stage of the company, the more critical the founders’ background, temperament and experience becomes. Founder “fall out” or poor performance is perhaps the highest risk for early stage startups. We look for:

Intellectual firepower and a voracious appetite to learn, unimpeded by emotional barriers
People we think we will enjoy working with and whose integrity we trust
A good track record of achievement, and ideally, a good university and previous experience as founder(s)
The passion, commitment, tenacity and resilience to battle through challenges and make the business work
Leadership and interpersonal skills; people who can engage others in realising their vision, work well with others and resolve conflicts
Ideally founders will have experienced the pain point their business is “solving” – at minimum they will have a deep understanding of customer needs and wants
Skin in the game – founders have significantly invested and are working full time or planning to soon

Market

A real pain point or problem, which ideally, a founder has experienced

An effective solution with a competitive edge
A product or service that customers love and for which they are or will be willing to pay
Scaleability; a huge global market

Deal Terms/Structure:

Fair protections for investors including, founder retention provisions, 1 x liquidation preference and follow on rights
Fair valuation – Investing is not only about finding the next Atlassian, it is about investing at a valuation that will make money for investors
Terms which will incentivise founders to produce strong returns and not impede future funding

Technology

Innovative and strong technology giving the business a significant advantage over competition.

Traction

We prefer to see some traction or at least an MVP, but we recognise that the highest returns can be made investing at a low valuation, often pre-traction; in these cases, though, the founder must have a strong track record and validation that customers will love their product.

Purpose

The company is doing something to make the world better in some way, even if this is just increasing efficiency. We do not invest in anything that is likely to cause harm to people (e.g. gambling, tobacco or alcohol) or the environment.