CastAR was an augmented reality startup founded by former Valve employees Jeri Ellsworth and Rick Johnson. The company aimed to create affordable AR glasses that projected 3D holographic images. Despite initial excitement and $15 million in funding, CastAR shut down in 2017 due to financial struggles and failed investment rounds.
What Was CastAR?
CastAR's main product was augmented reality headsets that projected 3D holographic images into the user's field of view. Their unique value proposition was delivering affordable, consumer-level AR glasses designed for natural and responsive interaction. Notable achievements include raising over $1 million on Kickstarter and securing $15 million in venture capital.
What Happened to CastAR?
The story of CastAR is a compelling tale of innovation, ambition, and the harsh realities of the startup world:
Founding and Early Success: CastAR was founded in 2013 by former Valve employees Jeri Ellsworth and Rick Johnson. The company quickly gained traction with a successful Kickstarter campaign, raising over $1 million to develop affordable AR glasses.
Innovative Technology: The startup aimed to create AR glasses that projected 3D holographic images, offering a "magical experience" of augmented tabletop games. This unique focus set them apart in the burgeoning AR market.
Initial Funding and Support: CastAR secured $15 million in venture capital from Andy Rubin's Playground Global. This significant investment underscored the market's initial confidence in their vision and technology.
Financial Struggles: Despite early successes, CastAR faced financial difficulties when Playground Global declined further investment. The company also failed to secure Series B funding, leading to severe financial instability.
Closure and Layoffs: By 2017, CastAR had not brought its product to market and was forced to shut down. Approximately 70 employees were laid off, and the company closed its internal studio, Eat Sleep Play, marking the end of its ambitious journey.
When Did CastAR Shut Down?
CastAR shut down on June 27, 2017, after failing to secure additional funding from its backer Playground Global and other potential investors. The company laid off approximately 70 employees and closed its internal studio, Eat Sleep Play.
Why Did CastAR Shut Down?
Funding Challenges: CastAR faced significant financial hurdles, primarily due to the inability to secure additional investment. Despite initial backing from Playground Global and a successful Kickstarter campaign, the company struggled to attract Series B funding. This financial instability ultimately led to the shutdown and layoffs of approximately 70 employees.
Market Focus Limitations: The startup's focus on augmented tabletop games limited its market potential. While the idea of combining real game boards with AR overlays was innovative, it did not appeal to a broad enough audience compared to other AR solutions. This narrow focus hindered CastAR's ability to scale and attract a wider customer base.
Strategic Missteps: One critical strategic error was the decision to refund the Kickstarter funds in 2015, as advised by Andy Rubin. Although the company still sent out the promised units, this move drained resources and forced CastAR to start from scratch, impacting its financial health and delaying product development.
Technical Ambitions: CastAR aimed to create a self-contained AR unit, which presented significant technical challenges. The ambitious goal of developing a standalone platform may have stretched the company's resources too thin, contributing to delays and the inability to bring a market-ready product to fruition.
Partnership and Management Issues: The partnership with Eat Sleep Play and former Disney Infinity developers was intended to bolster AR software development. However, the internal studio's closure and the subsequent layoffs indicate potential management and operational inefficiencies that further strained the company's resources.
Lessons Learned from CastAR's Failure
Secure Diverse Funding: Relying on a single investor can be risky. Diversify funding sources to ensure financial stability.
Broaden Market Appeal: Target a wider audience to increase market potential and scalability.
Strategic Financial Decisions: Carefully evaluate the long-term impact of financial moves, such as refunding backers.
Manage Technical Ambitions: Balance innovation with feasibility to avoid overextending resources.
Effective Partnerships: Ensure partnerships and internal teams are well-managed to optimize operational efficiency.
We Shut Down Startups
CastAR's journey underscores the complexities and challenges startups face, from securing funding to managing technical ambitions. When a startup like CastAR reaches the end of its road, Sunset steps in to handle all the legal, tax, and operational burdens, allowing founders to move on swiftly and without penalties.
If you're facing similar challenges, let Sunset take care of the winding-down process for you. Book a demo today to see how we can help you avoid penalties and reduce liabilities.
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