Magic Leap is turning to a major health care company to save its future, potentially raising as much as $100 million

May 5, 2020 Augmented Reality, Orthopedics, Surgical Training, Zimmer Biomet

Magic Leap is looking to raise money from a major health company in order to protect its future, having just laid off around half of its workforce.

As first reported by The Information on Tuesday, Magic Leap CEO Rony Abovitz told staff in a memo that the company had signed a term sheet with “a major health care company” to drive its strategy forward.

Sources told Business Insider that talk of a deal with a health care company had been swirling around internally for some time, and that Magic Leap was hoping to secure $100 million from the deal.

However, the name of the company itself is not yet known. According to The Information’s report, one name being passed around internally is Zimmer Biomet, which is based in Warsaw, Indiana and develops treatments for bone and joint injuries.

The mystery company will reportedly use the headsets for surgical procedures and training if the deal is locked. But according to the emails seen by The Information, Abovitz told staff that the deal could still fall apart.

The potential of an acquisition by a medical company would represent the culmination of a striking change of fortune for one of the most hyped startups in years. At one point valued at $6 billion by investors including Google and Warner Brothers, Magic Leap mesmerized tech industry insiders and celebrities alike, with private demos of augmented reality technology that offered an almost hallucinogenic experience.

Rumors of a medical company stepping in to “save” the company were swirling around for several weeks before the company layoffs, one source told Business Insider. Some employees believed the company would try to purchase Magic Leap outright, but the $100 million amount being tossed around suggested an investment was in the cards.

But suspicions about an outright buy were stoked when Bloomberg reported that Magic Leap, which has raised over $2.5 billion over the years from investors including Google, was exploring a sale, citing that the company thought it could fetch $10 billion.

By Hugh Langley | Business Insider

Image Credit: Asa Mathat / Vox Media

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About Peter Coffaro 487 Articles

A growth-driven and strategic executive, Peter Coffaro commands more than 25 years of progressive management success within the medical device industry. Recognized by the World Journal of Orthopedics, Exponential Healthtech, and MedReps.com as one of the top medical sales influencers in the industry; he has 10 years of combined sales management experience and has held positions as a Director, General Manager, Distributor, and Vice President. Peter has worked for some of the top orthopedic companies in the world - Zimmer, DePuy, and Stryker. He is also the founder of OrthoFeed: a popular blog that covers digital orthopedic news and emerging medical technologies. Peter is a three-time Hall of Fame award winner at Johnson and Johnson and has an extensive background in organizational development, business development, sales management, digital marketing, and professional education. Peter holds a B.S. degree in Biology and Chemistry from Northern Illinois University.