Investing in Trace
The following excerpt is from Allied’s original deal memo to investors. To review investment opportunities in full, please consider joining the syndicate at Allied.vc/join
While interest and investment in augmented reality (AR) rapidly increases, its implementation remains challenging for most businesses.
For instance, it’s estimated that by 2030, over 70% of organizations will have deployed at least one AR application into their customer and employee interactions to drive more immersive experiences. However, existing AR development tools are expensive, complex, and require technical expertise that is not widely available.
As a result, creating AR content can be a lengthy process that often takes months and costs hundreds of thousands of dollars per project, thus significantly limiting an organization's ability to leverage AR at scale.
Enter Trace
Trace is a software platform that enables anyone to easily create and deploy AR experiences without coding or technical expertise.
Founded by a team of former AR and spatial computing experts from Samsung, Magic Leap, and Disney, Trace was selected by Apple among 800 startups worldwide to become an early development partner for the Vision Pro headset.
Working closely with Apple in private beta throughout 2022-23, Trace has built an impressive platform capable of generating AR content. Like Canva for graphic design, Trace is a software platform that enables anyone to quickly and easily build and deploy immersive AR experiences in minutes without any technical expertise. This immersive content is hardware-agnostic and viewable on smartphones, tablets, and Apple’s new Vision Pro.
By building an easy-to-use, no-code platform in the vein of Canva for visual design, Trace enables even non-technical marketing and creative teams to build and deploy immersive AR experiences quickly and cost-effectively. Using Trace, non-technical marketing teams can create and deploy immersive AR experiences in under a day for less than $1k per location.
Why we are thrilled to support the team at Trace
1) Proven Team with Deep Domain Expertise
The founding team at Trace is exceptionally well-qualified to take on this ambitious mission. They have decades of deeply relevant experience developing advanced AR/VR/spatial computing technologies, including prior work at industry-leading companies such as Samsung, Magic Leap, Disney, Epic Games, and within the U.S. Army's research division.
In addition, the team has proven their ability to land and expand large-scale enterprise contracts, as evidenced by winning the Apple Vision Pro partnership among 800 startups globally and closing large-scale enterprise contracts with T-Mobile, Qualcomm, Deutsche Telekom, Lenovo, and others.
With computer science, engineering, design, and business backgrounds from top schools like Harvard and George Washington University, we believe this team brings together the ideal hard skills and business acumen needed to become the primary platform powering the AR revolution.
2) Large and Rapidly-Expanding Market Opportunity anchored by Apple
AR/VR is a massive and fast-growing market opportunity expected to reach $365B by 2030, representing a CAGR of 39%. For example, in a recent survey, 49% of companies indicated already using or planning to adopt AR, and 84% believed it will play an even greater role in the next 5 years.
By 2030, it’s estimated that 72% of global organizations will have deployed at least one AR activation. This underscores the dramatically expanding demand from businesses aiming to incorporate AR (and an addressable market that is worldwide in scope).
Lastly is the Apple Effect, whereby Apple introduces an innovative technology that achieves unprecedented worldwide adoption and drives entire new industries. Like the iPod, iPhone, iWatch, and now Vision Pro, Trace is exceptionally well-positioned to capture significant marketshare alongside the growing wave of demand as Apple spurs mass adoption of AR.
3) Strong Early Traction and Demand
Trace has demonstrated promising initial progress with select enterprise clients in its private beta. The platform has already generated strong revenues and has acquired notable customers from various global industries, including tech, retail, and aerospace. These high-profile clients include big names such as T-Mobile, Blue Origin, Qualcomm, Lenovo, Deutsche Telekom and others.
Alongside the Apple Vision Pro launch in February 2024, Trace is projecting even stronger growth. As such, we believe the Trace platform has the potential to achieve nine-figure top line revenue before the end of the decade.
In Summary
Per our investment thesis, we love talented teams building infrastructure-layer software at the nexus of large and rapidly expanding markets. We believe Trace is uniquely positioned to ride the impending wave of global adoption and capitalize on the rapidly expanding $365B AR market.
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