Meta, makers of an AR headset dev kit, was close to raising a new round of funding before a Chinese lead investor backed out, Bloomberg reports. The Chinese investment firm had reportedly put up $20 million for the deal. Meta claims that the Chinese government urged the investment firm to reconsider the deal following trade tensions brought on by the Trump administration.

Meta, makers of the Meta 2, a tethered AR headset dev kit with a notably wide field of view, last raised $50 million in Series B funding back in mid 2016. According to Bloomberg the company had secured a lead investor for its next funding round, a Chinese private-equity firm and real estate entity which agreed to bring $20 million to the deal, with additional funding to be filled out likely in lesser increments from other investors.

But the deal hit a stumbling block when the lead investor backed out of the deal. Meta claims that the reversal was a result of trade tensions incited by the Trump administration.

“The Chinese government sent an official request to our lead investor to re-evaluate the deal based on the recent actions from the Trump administration,” Gribetz told Bloomberg. “This was a big shock to us.”

The stagnanting deal led Meta to furlough two thirds of the company’s roughly 100 employees, Bloomberg reports, suggesting the startup is short on cash.

The Meta 2 AR headset is bulky compared to other AR headsets on the market but offers a much wider field of view| Photo by Road to VR

Chinese investment in the US startup and tech space has been growing steadily, and has been a key source of capital for AR and VR companies like Magic Leap, which saw investment in both its Series C and Series D rounds from Chinese online mega-retailer Alibaba. Those rounds totaled nearly $1.3 billion, according to Crunchbase.

Meta itself counts China-based Tencent and Lenovo among its existing investors.

Over the last year the US has imposed tariffs on products from China, Mexico, Canada and the EU in an effort to make international goods less competitive in favor of domestic ones, according to BBC. President Trump says the goal of the tariffs on Chinese goods is to stop the “unfair transfers of American technology and intellectual property to China” and protect US jobs. All of the aforementioned countries, including China, have initiated retaliatory trade policies.

Meta, like any other US company, has to try to survive despite bumpy trade relations between the US and China. According to Bloomberg, the company plans to establish a Chinese subsidiary independent from its US operations which would allow the Chinese lead investor to back the company without making an investment in the US.

SEE ALSO
Exclusive: Meta 2 AR Demos Revealed in Full

As the VR and AR sector goes, Meta has been around for quite a long time. Founded in 2012, the company ran a successful Kickstarter in 2013 for an early AR development headset. In the company went on to raise $73 million between its Series A and Series B investments. In 2016 Meta announced its newest AR dev kit, the Meta 2, a tethered AR headset development kit with a wide field of view, which the company currently sells for $1,500.

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Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • Smokey_the_Bear

    Good ol’ communist China.
    Put yourself in that position,I’m imagining me investing in a Chinese company, and then the US Government told me that would be un-wise to do so…I’d tell them to pound sand.

    • jj

      yeah as an american i’m more mad at trump than china. he’s messed up so many things. but yeah politics will probably be a hell storm if we discuss it in the comments.

      • kuhpunkt

        MAGA!

      • Smokey_the_Bear

        Your right about the hell storm. I’m pro-Trump, and love what the guy has been doing, it’s about time a political outsider has shaken things up.

        • Brian wandell

          I suspect the people furloughed at Meta don’t share your enthusiasm.

          I could admire your thinking more if you expressed satisfaction at losing your own job.

          • Smokey_the_Bear

            The people let go will have no problem finding a job with their growing demand skill set. If you want job security, choose a job that is in high demand, I did.

        • jj

          by shake things up do you mean, play golf,create a Muslim ban, antagonize a nuclear war with another crazy leader, chose Russia over our own intelligence agency, the list goes on man. Trump is a piece of shit whos only done shitty things. if you’re for trump you’re for racist, misogynistic, and corrupt things.

          • Smokey_the_Bear

            Shocker, another lefty who thinks Trump (and everyone who likes his policies) is a xenophobic, racist, sexist, idiot.
            I’ll touch on all your topics:
            -I agree that I think he plays too much golf.
            -There is no “Muslim ban”, many non-Muslim countries were also on the list…but that doesn’t fit your mantra. Also the Supreme Court agreed with Trump on it not being a “Muslim ban”.
            -I assume your referring to his negotiating tactics with Kim Jong Un…Which has since not fired a single missile, detonated a single nuclear warhead, and is continuing the pledged path to denuclearize the Korean peninsula. If they continue to do this, Trumps second term is virtually locked.
            -He of course believes our intelligence agencies over Russia’s, or any other countries for that matter. The guy mispoke one time, and has said as much. Dispite you truly thinking Russia helped Trump win, no evidence has ever turned up. No country has ever tampered with our ballot boxes. But technology continues to play a bigger role in our elections, which is why Trump just signed an executive order to put sanctions on any country meddling with US elections.
            Any other issues?

          • Brian wandell

            This bit of your argument could be improved.

            -He of course believes our intelligence agencies over Russia’s, or any other countries for that matter ….

            As you likely know, President Trump has repeatedly denied the intelligence, not once. Further, the reported tampering is not with the ballot box but through fake news. Trump did not act to prevent external forces in any significant way that wasn’t pressed on him by other agencies. It is widely reported that he has failed to enforce sanctions on Russia. Puzzling stuff.

            You seem like an open-minded person. Let’s wait to see what, if any, evidence Mueller turns up on these matters. He has a long and distinguished record of honesty, and if there is nothing there he is quite likely to say so.

            Finally, I know quite a number of people at Meta. I feel more empathy for them than you do. It is true that they are highly trained, but this disruption is quite significant in their lives. The furlough will be challenging for them, as it would be for any of us.

    • Alexisms

      USA owes China over ONE TRILLION DOLLARS in loans as it is.

  • dk

    https://youtu.be/AeKtp5RgV_4 meh the chinese can make their own cheap metas

    • Adrian Meredith

      That’s probably why they don’t need to invest anymore. Got what they needed..

    • Andrew Jakobs

      My god, that guy is annoying..

  • Courtney A Jeff

    I feel bad for meta but they already have raise so much Not exactly broke or bankrupt.The lenovo mirage solo has gone down to 100 at bestbuy.It is a available and ready ar unit.It has a high quality polished star wars game with three expanding experiences.Downside is only that free star wars jedi challenges but the polished saber alone seems worth 100.You can use almost any smartphone but you do need a phone.God bless

    • John McBride

      You are speaking of a different headset all together. The Mirage Solo is a 6-degrees alli-in-on VR HMD and doesn’t require a smartphone for $399 but the one you speak of is the Lenovo Star Wars Jedi Challenge AR headset.

      • JesuSaveSouls

        Your right,I meant the ar unit not the solo.

  • Jack Liddon

    Make America Grea…oh never mind.

    • JesuSaveSouls

      Go trump…Praise Jesus!

  • What a pity for an interesting AR company

  • Kenji Fujimori

    BoycottChina

  • JesuSaveSouls

    Will these skyrocket towering inferno price points and almost unattainable ar products eventually drop in price and be available more public and not so private to consumers ?