The technologies behind Virtual and Augmented reality are advancing at a fast pace and there is a lot of hype in the sector. However, the business models to leverage the emerging technologies are yet to mature. Despite advances in virtual reality technology and plenty of hype, the medium has yet to take off in the way its advocates envision.

With a recent blog post, A Very Sad Goodbye, AltspaceVR team announced it was shutting down.

It is with a tremendously heavy heart that we let you all know that we are closing down AltspaceVR on August 3rd, 7PM PDT. The company has run into unforeseen financial difficulty and we can’t afford to keep the virtual lights on anymore. This is surprising, disappointing, and frustrating for every one of us who have put our passion and our hopes into AltspaceVR. We know it will probably feel similarly for you.

AltspaceVR was a social space in VR where people could gather in environments that resembled virtual worlds. They could create their own avatars and chat with friends.

Fans of virtual reality are sure to feel letdown by this shutdown. News of the social VR platform’s closing rippled throughout the VR community over the past week, and some are wondering if it is a bellwether to the overall health of the VR segment.

What happened? “We’re a venture-backed startup. We had a supportive group of investors that last gave us money in 2015. It looked like we had a deal for our next round of funding, and it fell through. Some combination of this deal falling through and the general slowness of VR market growth made most of our investors reluctant to fund us further. We’ve been out fundraising but have run out of time and money.”

Is it because the product wasn’t working? “We sure don’t think so. Around 35,000 people use our product every month, which we think is pretty good for the size of the VR market. The average user spends 35 minutes a day in AltspaceVR, and in big events we typically see around a thousand attendees. We have active developer and event organizer communities and have attracted marquee partners for our events.”

VR and gaming was among the top-25 digital trends our researchers were looking at.