A Bristol start-up developing hand-tracking technology similar to that seen in Tom Cruise’s sci-fi film Minority Report is facing a debt crisis after receiving millions in taxpayer money.
Ultraleap, which received funding from British Patient Capital, is on the hunt for a fresh cash injection and is considering splitting its operations after breaching its banking covenants.
The start-up admitted breaching the terms of a loan worth more than £15 million, although it insisted the lender had “supported” its efforts to raise new funding.
The company, which is based out of the University of Bristol and has raised more than £100 million, is developing a hand-tracking controller for use with virtual reality headsets and touch-free screens. It eliminates the need for a traditional gaming controller or handset.
The technology is similar to that proposed in the 2002 film Minority Report, in which a police officer, played by Mr Cruise, uses gestures to control a giant hands-free computer.
However, consumer demand for virtual and augmented reality technology is weak, even after tech giants like Apple and Meta launched headsets designed to immerse users in digital worlds.
In reports published this month, Ultraleap admitted the market had “continued to decline into 2024”, leading to cost savings. It said it had managed to raise a convertible bond, a form of debt, worth £9.75 million in the first half of last year.
According to the accounts, the company lost £27m in the year ending December 2023, compared to £23.6m a year earlier. Revenues remained roughly the same at £4.2 million.
Ultraleap, formerly called Ultrahaptics, has received financial backing from investors including China’s Tencent, London-listed IP Group and the now-defunct Woodford Equity Income Fund.
It has also secured millions of pounds from government-backed investor British Patient Capital, through its Future Fund: Breakthrough scheme.
While raising £60m in 2021, Ultraleap CEO Tom Carter praised the potential for ‘metaverse’ technologies as the company looked to ‘remove the boundaries between the physical and digital worlds’.
Major tech companies have since been outraged by the concept of a “metaverse,” a kind of 3D digital world that includes virtual reality and social media.
Despite tens of billions of dollars of investment from Apple for its Vision Pro headset and Meta for its Quest products, virtual and augmented reality products remain a niche.
According to Trendforce data, global sales hovered around 9.6 million units in 2024, up 8.8% year-on-year. IDC data cited by Ultraleap shows that there was a 67 percent drop in shipments in the first three months of 2024 alone.