The future of the metaverse depends on tech companies avoiding past pitfalls

That’s one of the takeaways from day one of Fortune’s Brainstorm Tech conference on Tuesday which covered everything from the future of 5G, autonomous vehicles, to super apps.

Inevitably, more than a few conversations turned in that direction, with the buzzy concept—which in general points to a class of technologies that will create an immersive virtual world—providing both exciting new opportunities for work and play, but also pitfalls. No doubt the mistakes that tech social media giants like Meta have made serve as a cautionary tale for those watching this new world.

As companies working toward a metaverse blur the lines between the physical and the digital—it raises yet another question: “Is behavior in virtual reality closer to physical behavior, or is it speech?” asked Alex Stamos, partner at cybersecurity consultancy Krebs Stamos, noting that the U.S. has lax content moderation laws due to the First Amendment. “It is one thing for me to be able to send 280 characters on Twitter that threatens your life to doing the same in VR,” he says. 

VR has been used to treat those with trauma, suggesting that the technology can have lasting psychological impacts that last into real life, he notes.

It’s worth noting Stamos is the former Chief Security Officer of Facebook. His perspective of his former employer also offers another key consideration: Whether the company’s shift to the metaverse will drag on the giant’s ability to adequately address its existing political and moral problems. 

“I think Mark [Zuckerberg] has been distracted by the metaverse stuff. The Meta rearrangement was a great opportunity for Zuck to step down,” said Stamos. “I really wish they had gone the whole way with Meta and made Facebook a separate operating unit with its own CEO—maybe Chris Cox—because I don’t think Zuck is really paying attention to the core problems he has at Facebook from a political perspective and from a content moderation perspective.”

Niantic, the now $9 billion startup that built Pokemon Go, is one of those companies that has been a part of the so-called metaverse in many ways before the term became more popular this year. Focused on augmented reality, its CEO John Hanke too cautioned against the version of the metaverse that has been shown in fictional works such as Ready Player One.

“I’m a fan of the metaverse as a work of fiction,” Hanke said. “But if you read all the way to the end—I’m not sure everyone who’s been talking about it has read to the end—you know the world in those books is this horrible place.” 

Instead, he coins an alternative version that he dubs a “real-world metaverse”—one in which AR takes center stage rather than the virtual reality mock-ups that have been shown in Meta’s presentations of its vision.

“I like watching a great movie on a giant screen. I want to see Dune on the biggest screen possible. I think VR is good for that,” he said. “But even then would I want to watch a movie or have a VR experience with my wife at home with my wife with us sitting side by side with a VR headset on vs. having a screen and feeling her presence and being there together? I don’t know. I think VR is kind of a niche application.” 

You can read more on his version of the future here.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com

Jessica Mathews curated the deals section of today’s newsletter.

VENTURE DEALS

- Commonwealth Fusion Systems, a Cambridge, Mass.-based clean energy company, raised $1.8 billion in Series B funding led by Tiger Global and was joined by investors including Bill Gates, Coatue, DFJ Growth, Emerson Collective, Google and others.

- Via, a New York-based transit technology and mobility company, raised $130 million in Series G funding led by Janus Henderson and was joined by investors including BlackRock funds, ION Crossover Partners, Koch Disruptive Technologies, and Exor.

- CloudTrucks, a San Francisco-based trucking business management platform, raised $115 million in Series B funding led by Tiger Global and was joined by investors including Menlo Ventures, Flexport, Michael Ovitz and Opendoor CEO Eric Wu.

- CyCognito, a Palo Alto, Calif.-based external attack security company, raised $100 million in Series C funding led by The Westly Group and was joined by investors including Thomvest Ventures, The Heritage Group, Accel, Lightspeed Venture Partners, Sorenson Ventures, and UpWest. 

- Fundbox, a San Francisco-based financial platform for small businesses, raised $100 million in Series D funding led by the Healthcare of Ontario Pension Plan and was joined by investors including Khosla, Allianz X, and BNY Mellon.

- Curie Therapeutics, a Cambridge, Mass.-based biotechnology company, raised $75 million in Series A funding from Atlas Ventures, Access Biotechnology and RA Capital Management.

- Klue, a Vancouver-based competitive enablement platform, raised $62 million in Series B funding led by Tiger Global and was joined by Salesforce Ventures. 

- Quince, a San Francisco-based retailer, raised $50 million in Series A funding led by Insight Partners and was joined by investors including Founders Fund, Basis Set Ventures, Lugard Road/Luxor Capital and 8VC.

- Virtual Incision Corporation, a Lincoln, Neb.-based robotic support company for laparoscopic surgery, raised $46 million in Series C funding led by Endeavour Vision and Baird Capital and was joined by investors including Bluestem Capital.

- Q-CTRL, a Sydney, Australia-based quantum control engineering solutions company, raised $25 million in Series B funding led by Airbus Ventures and was joined by investors including Ridgeline Partners.

- Fable, a Palo Alto, Calif.-based social platform for book clubs and stories, raised $20 million in Series A funding led by Tiger Global and was joined by investors including Redpoint Ventures, Gaingels, Breyer Capital, and defy.vc. 

-  Pepper, a New York-based food supply chain technology company, raised $16 million in Series A funding led by Index Ventures and was joined by Greylock, Imaginary Ventures, BoxGroup, Moving Capital, and Brett Schulman. 

- Stratio, a Lisbon, Portugal-based automobile predictive maintenance platform, raised $12 million in Series A funding led by Forestay Capital and was joined by investors including Crane Venture Partners.

- Sortera Alloys, a Fort Wayne, In.-based product waste reuse company, raised $10 million in funding led by Breakthrough Energy Ventures.

- StormSensor, a Seattle, Wash-based climate technology data tracking company, raised $10 million in funding co-led by Orbia Ventures and Buoyant Ventures and was joined by investors including Burnt Island Ventures, Gratitude Railroad, Portland Seed Fund, the American Family Institute for Corporate and Social Impact, and others. 

- Strivacity, a  Herndon, Va.-based customer identity and access management provider, raised $9.3 million in Series A funding led by Ten Eleven Ventures and was joined by investors including Toba Capital.

- NuBrakes, an Austin, Tex.-based mobile auto maintenance platform, raised $9 million in Series A funding led by Canvas Ventures and was joined by investors including Contrary Capital, Bling Capital, and Automotive Ventures. 

- DeepStream, a London-based cloud-based procurement platform, raised $7 million in Series A funding led by Beringea and was joined by investors including Seed X Liechtenstein, Conviction VC and Portfolio Ventures.

- Hologram, a Chicago-based global cellular platform for IoT (Internet of Things) connectivity, raised an additional $6.8 million in Series B funding from investors including Founders Circle Capital, Mindset Ventures, Chingona Ventures, and Converge. The firm has now raised $67 million in the round.

- Soveren, a London-based startup privacy risk detection company, raised $6.5 million in seed funding led by Firstminute Capital and was joined by investors including Northzone, Airbnb Mulesoft, and others. 

- Wispr AI, a San Francisco-based neurotechnology company, raised $4.6 million in seed funding co-led by NEA and 8VC and was joined by investors including CTRL-Labs co-founder Josh Duyan, Warby Parker CEO Dave Gilboa, and others.

- Headset, a Seattle, Wash.-based cannabis consumer trends and market intelligence company, raised $3 million of funding led by Althea and was joined by investors including Poseidon Investment Management and WGD Capital.

- Outfit, a Brooklyn-based content creator platform, raised $2.1 million in seed funding from LAUNCH Syndicate, KM Capital, and Patina Brands.

- Wave, an emotional care company for teens and young adults, raised $2 million in seed funding led by Hannah Grey VC and was joined by investors including Tribe Capital, k50 Ventures, Alumni Ventures Group/Basecamp, Conscience VC, Verissimo Ventures and others.

PRIVATE EQUITY

- Athene, owned by Apollo, acquired Aqua Finance, a Wausau, Wis.-based consumer lending platform, from Blackstone funds for $1 billion. Blackstone will maintain a minority stake.

- Boathouse Capital invested $8 million in Sandboxx, an Arlington, Va.-based connectivity platform for military service members. 

- Bitly, owned by Spectrum Equity, acquired Egoditor GmbH, a Bielefeld, Germany-based QR code platform. Financial terms were not disclosed.

- Blue Point Capital Partners acquired Brimar Industries, a Garfield, N.J.-based safety and traffic sign manufacturer. Financial terms were not disclosed.

- Edifecs, owned by TA Associates Management and Francisco Partners, agreed to acquire Health Fidelity, a San Mateo, Calif.-based risk adjustment solution provider. Financial terms were not disclosed.

- Jitterbit, backed by Audax Group and Salesforce Ventures, acquired Wevo, a Latin American enterprise integration platform provider. Financial terms were not disclosed.

- Monomoy Capital Partners agreed to acquire Thetford, an Ann Arbor, Mich.-based RV and truck sanitation and care product company, from Dyson-Kissner-Moran. Financial terms were not disclosed. 

- Optimizely, owned by Insight Partners-backed Episerver, agreed to acquire Welcome, a New York-based marketing team collaboration platform. Financial terms were not disclosed.

- Quality Valve, backed by Pfingsten, acquired Griffco Valve, an Amherst, N.Y.-based back pressure valve and pump system accessory company. Financial terms were not disclosed.

- Sunstone Partners made a strategic investment in Vcheck Global, a Los Angeles-based background check and due diligence investigation services company. Financial terms were not disclosed.

EXITS

- EQT Infrastructure acquired Covanta, a Morristown, N.J.-based sustainable waste and energy solution company backed by Equity Group Investments, for $5.3 billion. 

- Abry Partners acquired BL Rankings, an Augusta, Ga.-based peer review publication for attorneys, from Levine Leichtman Capital Partners. Financial terms were not disclosed. 

- Cennox acquired Fire King, a New Albany, Ind.-based asset protection and cash cycle management equipment manufacturer, from Pfingsten. Financial terms were not disclosed.

- Veritas Capital agreed to acquire Finalsite, a Glastonbury, Conn.-based school website and digital communications tool company, from Bridge Growth Partners. Financial terms were not disclosed.

- 3i Group acquired a majority stake in EC Waste, a Puerto Rico solid waste services company, from Post Capital Partners. Financial terms were not disclosed.

 OTHER

- Aqua Security acquired Argon Security, a Tel Aviv-based software supply chain security company. Financial terms were not disclosed

IPO

Dubai Electricity & Water Authority, the Dubai government’s utility company, has hired bankers for its upcoming IPO that could raise as much as $2 billion, according to Reuters. 

Popular Vehicles & Services, an auto dealer in India, is planning to list in the country in an $100 million IPO, per Reuters.

Versus Systems, a Vancouver-based user engagement tool company, filed for an IPO in the U.S. The company posted $1.4 million in revenue in 2020 and reported a net loss of $6.9 million. Wasatch Advisors backs the firm.

Coforge, a New Delhi-based IT services and solutions firm, filed for an IPO in the U.S. The company posted $629 million in revenue in the 12 months ending in March and $63 million in profit. Axis Bank backs the firm.

Spark Education, a Chinese after-school tutoring technology company, withdrew its application for an IPO in the U.S.

Open English, a Coral Gables, Fla.-based English learning platform for Spanish speakers in Latin America, is planning for an IPO in the U.S. next year, per Bloomberg.

Jahez International Company for Information Systems Technology, a Riyadh-based online food delivery platform is preparing for an IPO in Saudi Arabia, according to Bloomberg. 

SPAC

- Voltus, a San Francisco-based distributed energy resource software platform, plans to go public via a merger with Broadscale Acquisition Corp., a SPAC. A deal values the company at $1.3 billion.

F+Fs

- Borderless Capital, a Miami-based venture capital firm, launched a new $500 million fund. 

- Bessemer Venture Partners, a San Francisco-based venture capital firm, raised $220 million for a new fund focused on India.

- Allegion Ventures, the Carmel, Ind.-based ventures arm of Allegion, launched a second fund with $100 million. 

- Speedinvest, a European venture capital firm, launched a new $90.7 million fund.