WaveOptics, a company that develops core optical components for augmented reality (AR) displays, has closed its “oversubscribed” series C round of funding at $39 million.

The Abingdon, U.K.-based startup announced the first $26 million tranche of its series C funding last December, and has now added a further $13 million to the pot, courtesy of Chinese electronics company Goertek, an existing WaveOptics partner, and Australian superannuation fund Hostplus. They join other investors in the round including Octopus Ventures, Robert Bosch Venture Capital (RBVC), Gobi Partners, and IP Group.

Founded in 2014, WaveOptics develops so-called “waveguide display technology” for manufacturers to incorporate into their AR wearables. Waveguides, for the uninitiated, underpin most AR devices, serving to guide waves of light between a small projector to the glass in front of the wearer’s eyes. The main underlying selling point to WaveOptics’ technology is that it promises to circumvent the “three major challenges for AR wearables,” as it puts it, which are design, cost, and optical performance. In short, it’s all about keeping costs down and quality up, while creating smaller waveguide modules to enable more compact AR wearables.

Among WaveOptics’ customers are China’s Rokid, which recently debuted its prototype Project Aurora smart glasses, which can connect to any device via USB-C.

“We are seeing significant progress with our customers developing their own products based on our technology,” noted WaveOptics CEO David Hayes. “This was demonstrated in the first half of 2019 when we secured a number of significant partnerships with global OEMs and ODMs.

Rise of AR

While not a new medium, AR is starting to infiltrate the mainstream, due in part to the proliferation of powerful smartphones and also due to the increased investment in dedicated wearables. With Microsoft gearing up to launch the next iteration of its HoloLens AR headset, Magic Leap continuing to raise crazy sums of cash to expand into new verticals, new AR startups coming to the fore, and both Google and Apple increasing their AR investments across software and hardware, it’s clear that AR is only going to become more prominent. Indeed, 2017 estimates pegged the AR market as a $4.2 billion industry, a figure that could rise to $85 billion by 2025.

“This is an exciting time and we are perfectly positioned to help our customers bring to market one of the most significant technologies since the launch of the smartphone,” Hayes continued.

WaveOptics closed its previous round at $15.5 million back in 2017, and with its latest cash injection it said that it said that it plans to continue scaling its its operations in the U.S., U.K., and Asia, which includes building “high-volume” manufacturing capabilities.

“Completing the series C funding is another important step for the business, enabling us to accelerate our growth to meet the increasing international customer demand,” added Hayes. “The oversubscription also validates the quality and potential of our technology to our partners and investors and is clear recognition of our leading position in the AR market.”