Tencent-backed startup Ultraleap has been sold for parts and laid off more than half of staff, following commercial struggles amid a global decline in sales in the extended reality sector.
Bristol-based Ultraleap, which is developing extended reality (XR) technology for haptics and hand tracking and had been seeking to sell off parts of its business for months, has now found buyers, according to sources familiar with the situation.
The company has agreed to sell the portion of its business developing hand-tracking tech to musical instrument company Roli, the sources said.
Intellectual property surrounding the startup’s haptics and hand tracking business units has been sold to US IP financing company SIM IP, in a deal that is expected to complete in March and announced last month.
Ultraleap also announced internally that it would lay off 30 employees last Friday, leaving the company with around 24 remaining staff — who will join Roli as part of the sale, according to sources.
Ultraleap declined to comment.
Underperforming
Since launching in 2013, Ultraleap has raised over $200m from investors including Tencent, IP Group and British Patient Capital, as it looked to commercialise its tech for use cases in healthcare and motoring.
But XR, a catch-all term for immersive technologies like virtual or augmented reality, has faced difficulties over the past year.
Shipments of AR and VR headsets dropped more than 67% globally in Q1 of 2024, according to market intelligence company the International Data Corporation. Last year, Meta discontinued its VR headset and Apple scaled back production of its own.
Ultraleap made an initial round of layoffs in the summer of 2024.
“During 2024, the AR/VR market in which the group operates has underperformed in relation to expectations held at the year-end [in 2023],” Ultraleap said in its most recent financial accounts, published October last year and covering accounts from 2023.
Those accounts added that the company had breached the terms of a £15m loan and may have to sell parts of its business to raise funds.
Ultraleap is the latest example of a UK deeptech — a type of startup developing tech rooted in scientific or engineering innovation — struggling to convert promising research and development into a solid commercial proposition.
In February 2024, e-van maker Arrival entered administration after missing commercial targets and chip company Graphcore was sold for less than the nearly $700m invested into it in July.
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