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Improbable valued at US$1bn after Softbank injects US$500mln into UK virtual reality start-up

Last updated: 15:00 12 May 2017 BST, First published: 11:13 12 May 2017 BST

Virtual reality
Improbable was founded by Cambridge University computer science graduates

A London-based virtual reality start-up, founded by Cambridge University graduates, has raised US$502mln in one of the largest ever investments made in a fledging European tech firm.

Improbable, which uses cloud-based computing to create virtual worlds for games and simulators, has been valued at more than US$1bn after funding from Japan’s Softbank.

The company was founded by Cambridge University computer science graduates, Herman Narula and Rob Whitehead, and Imperial College graduate, Peter Lipka, in 2012.

The co-founders continue to hold a majority stake in the company after the fundraising but are not taking any cash out of the business.

Improbable’s chief executive, Narula, and chief technology officer, Whitehead, met while studying at a computer lab during a dissertation review.

Narula said he and Whitehead discovered a mutual interest in multiplayer games and virtual worlds, which led the two to create the software for Improbable.  

“We believe that the next major phase in computing will be the emergence of large-scale virtual worlds which enrich human experience and change how we understand the real world,” he said.

Softbank’s investment in the firm comes after it bought chip maker Arm Holdings plc (LON:ARM) for £24.3bn last July, shortly after the UK voted to leave the European Union.

The telecoms-to-technology conglomerate will own a non-controlling stake of less than 50% in the business. The exact interest Softbank has bought was not disclosed by either party.

Softbank has put managing director Deep Nishar on Improbable’s board.

A previous financing round saw Improbable raise US$20mln at a US$100mln valuation from Andreessen Horowitz and Horizon Ventures, a fund run by British tech investor, Saul Klein, and the editor-in-chief of Wired UK, David Rowan.

Rowan told the Financial Times that there was a “real risk that Brexit will hit the London tech investment ecosystem hard”.

“So now any influx of large-scale funding from respected out-of-Europe investors will be a huge boost to the sector’s confidence.”

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