Saudi Public Investment Fund Backs Magic Leap With $205 Million

Magic Leap, the US augmented reality headset developer, raised an additional $205 million from Saudi Arabia’s Public Investment Fund, taking the fund’s total investment since 2022 to $1 billion. Magic Leap - once-positioned as a consumer hardware disruptor - has shifted towards enterprise-grade spatial computing and AI-driven solutions after sluggish market uptake of its early AR headsets. The new funding is expected to sharpen development of industry-specific XR tools and accelerate commercial deployments. The investment aligns with broader Saudi objectives to diversify its technology sector and elevate national capabilities in AI, cloud, and immersive platforms. For Magic Leap, the fresh capital offers a lifeline and strategic direction as the company steers away from its consumer-facing strategy. Founded in 2010 by Rony Abovitz, Magic Leap emerged as one of Silicon Valley’s most ambitious ventures in augmented reality, promising to revolutionise how humans interact with digital information. Backed early by major investors including Google, Alibaba, and AT&T, the company raised over $3 billion ahead of its first headset launch — a level of funding that made it one of the most heavily capitalised startups in tech history. Despite its vision, Magic Leap’s 2018 debut device, Magic Leap One, fell short of expectations due to high prices and limited practical use cases. The setback led to mass layoffs, executive reshuffles, and a sharp pivot from consumer products to enterprise solutions. By 2021, the company refocused under new CEO Peggy Johnson, a former Microsoft executive, steering towards industrial, healthcare, and defence applications. Its second-generation headset, Magic Leap 2, received stronger feedback for improved optics and software integration, securing partnerships with firms such as Siemens and Cisco. Saudi Arabia’s Public Investment Fund (PIF) became a majority stakeholder in 2023.