With a centrally located EU market and a top quality of life, Austria’s startup ecosystem has been growing over the past few years. There are over 3,200 startups and 135 VCs in the country, according to Dealroom, and €596m was raised by businesses through funding rounds in 2023.
When it comes to sectors, the augmented reality (AR), extended reality (XR) and virtual reality (VR) space is one to watch.
“Austria’s XR and VR sectors are in a healthy and promising state due to a combination of strong national support and a solid foundation in research,” says Matthias Grabner, chief partnership officer at independent think tank AI Austria.
This support includes applied R&D funding, with a cash tax premium of 14%, which can be combined with direct funding (of up to 70% for startups) from the Austrian Research Promotion Agency (FFG). Grabner also attributes innovation and growth in XR to the willingness of Austrian enterprise clients to adopt the technologies.
But is this enough for Austria to be Europe’s next AR, XR and VR hub? We took a look at the landscape.
A unique spot for the industry
Martin Herdina is ex-CEO of Wikitude, an Austrian pioneer in AR that gained global acclaim for its platform before being acquired by Qualcomm in 2021. Qualcomm’s AR R&D hub is also located in Austria.
Herdina believes Austria has a proportionally high share of AR, VR and XR initiatives in its startup ecosystem, making the country a “leading and unique spot for the industry as a whole”. He says this was driven by academic research from universities and research institutions — Statistics Austria estimated €16.6bn will be used for R&D in Austria in 2024.
[Institutions like] TU Graz, TU Vienna, FH Salzburg, FH Hagenberg and AIT started to invest in computer vision and perception R&D almost two decades ago.
According to AI Austria, over 100 Austria R&D projects focus on XR technologies across sectors like healthcare, mobility and education. Most are led by research institutions or universities, and around a third also involve a company.
“[Institutions like] TU Graz, TU Vienna, FH Salzburg, FH Hagenberg and AIT started to invest in computer vision and perception R&D almost two decades ago — to a large extent motivated by potential use for automotive and mobility that have crossed over into XR,” Herdina says.
“These investments have been bearing fruit and this strong basis has been leveraged and amplified by large multinational corporations like PTC, Qualcomm, Snap, AVL and TTTech, who have invested in local AR and VR initiatives through acquisitions and high-profile research corporations with academic institutions.”
Blackshark.ai collaborated with Microsoft to create detailed digital twins for Microsoft Flight Simulator, showcasing Austrian expertise in high-fidelity simulations.
Grabner agrees, adding that Austria’s talent pool also appeals to US-based tech giants.
“Snap Inc. chose Vienna for its R&D centre,” he says. “Blackshark.ai collaborated with Microsoft to create detailed digital twins for Microsoft Flight Simulator, showcasing Austrian expertise in high-fidelity simulations.”
Significant recent investments in startups like plug-and-play VR training solutions company Innerspaces (which raised €5.7m this February from German, Austrian and Canadian VCs) and mixed reality automotive solutions company NXRT (which raised €5m this August from German, Luxembourgish and Austrian VCs) also signal strong domestic and international confidence in Austria’s XR and VR innovation.
Startups are also moving to Austria such as South Korean XR startup Virnect which chose Vienna to be the location of its European headquarters and research centre.
A pivotal moment on the horizon
Austria’s business ecosystem shows the importance of collaboration between startups, research institutions and established enterprises. Grants are available not only for fundamental research but also specifically to enable XR solution providers to realise proof-of-concept projects with enterprise clients. This practical approach allows startups to test and refine their technologies in real-world settings, accelerating innovation and market readiness.
Eva Eggeling is director of data driven design at Fraunhofer Austria Research, an innovation research partner for Austrian industries. It offers XR workshops for startups that have little or no experience with the tech.
The real strength of Austria lies in the in-depth use case knowledge our ecosystem has developed over the years.
“We support companies in implementing XR applications in a wide variety of areas,” Eggeling tells Sifted. “XR startups are usually already well positioned, but Fraunhofer can provide startup support and help with development thanks to its many years of experience in the field.”
Vienna, Austria’s capital, Graz and Linz have emerged as regional hubs for XR, while the majority of startups in the country are less than five years old.
Through these initiatives, Grabner believes Austria’s XR and VR sectors are steadily advancing.
“The real strength of Austria lies in the in-depth use case knowledge our ecosystem has developed over the years,” says Grabner.
“I predict that as technological advancements occur and devices improve, leading to broader acceptance, Austria will leverage its specialised knowledge to drive innovation in XR and VR. We’ll see more immersive and user-friendly applications that enhance our interaction with technology, making it a more seamless and integral part of our daily lives.”
Startups and companies interested in the business and research location Austria can obtain free advice from the Austrian Business Agency (ABA). Information about the XR and VR ecosystem in Austria is to be found here.
Read the orginal article: https://sifted.eu/articles/xr-and-vr-hub-austria-2024-brnd/
