Virtual reality can be impressively immersive and realistic, but it’s still unusual to have experiences where you really, truly feel like you’re interacting with digital imagery—to the point where you have a ghostly sense of touching or poking something that, logically, you know isn’t there, though all the visuals point to the contrary.

I had one of those rare moments recently as I tried a demo made by a small startup called Midas Touch Games: while wearing an old Oculus developer headset that had a Leap Motion gesture controller attached to its front, I used stick-like virtual hands to play with an animated dog in a way that felt oddly true to life.

I could pet the dog, sure. But I could also tug at its ears or tail, lift the animal by its front legs, put my fingers in its mouth, and more. And every time I stroked, swatted at, or otherwise touched the dog with one or both hands, it responded with body movements that were much like what I’d expect from a real (albeit extremely patient) furry friend.

Midas Touch made this work by building software meant to properly mimic physics in virtual reality. In the case of the dog demo, for instance, it models the input device (my bare hands) as different bones that can collide with the dog. The dog, too, is modeled with 20 to 30 bones that have mass, shape, and friction, which can collide with my hands. When my hands move around, the software figures out how the two are striking each other and uses the force of that impact to figure out which muscles to tighten on the dog so it can keep its balance while I’m, say, pushing its legs.

The startup aims to license its technology to others who can add it to games and other VR applications and create digital images that you can push, ram into each other, and so on, in ways that simulate how these things happen in the real world. The company’s cofounder, CEO, and chief technology officer, Kevin He, thinks this characteristic is essential to making VR feel more lifelike and entrancing.

Evan Suma, a research assistant professor who studies virtual reality at the University of Southern California’s Institute for Creative Technologies, agrees, saying that Midas Touch Games is getting at one of the key things needed for VR to give a sense of presence: the illusion of plausibility.

Maintaining that illusion is “a game changer,” he says. “You’re no longer a spectator but a participant in the world.”