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 454 Articles

Strategic, growth-oriented executive with over 25 years of leadership experience in the medical device industry, specializing in orthopedics. Recognized as a top medical sales influencer, I bring a proven track record in sales leadership, business development, and organizational growth. My expertise spans digital health innovations, including wearables, robotic-assisted surgery, and virtual reality. I am the founder of OrthoFeed, an award-winning platform focused on digital orthopedic technologies, and a three-time Johnson & Johnson Hall of Fame award recipient. I hold a B.S. in Biology and Chemistry from Northern Illinois University.