And Bristol start-up developing manual tracking technology similar to the one seen in the Tom Cruise sci-fi movie, Minority Report faces a debt crisis after receiving millions in taxpayer funding.

Ultraleap, which received funding from British Patient Capital, is looking for a fresh injection of cash and is considering splitting up its business after breaching its banking covenants.

The start-up admitted it had defaulted on a loan, worth more than £15m, although it insisted the lender had “indicated support” for its efforts to raise new funding.

The business, which was spun off from the University of Bristol and has raised more than £100m, develops a hand-tracking controller for use with virtual reality headsets and non-touch screens. Eliminates the need for a game controller or traditional headset.

Its technology is similar to that envisioned in the 2002 film Minority Report, in which a police officer played by Mr. Cruise uses gestures to control a giant computer hands-free.

However, consumer demand for virtual and augmented reality technology has been weak, even after tech giants like Apple and Meta launched headphones designed to immerse users in digital worlds.

In accounts published this month, Ultraleap admitted the market had “continued to decline through 2024”, prompting cost-cutting. It said it managed to raise a convertible note, a form of debt, worth £9.75m in the first half of last year.

The company lost £27m in the year ending December 2023, according to the accounts, up from £23.6m the previous year. His earnings stood at approximately £4.2 million.

Ultraleap, formerly known as Ultrahaptics, has been backed financially by investors including China’s Tencent, London-listed IP Group and the now-defunct Woodford Equity Income Fund.

It has also secured millions of pounds from government-backed investor British Patient Capital through its Future fund: innovative scheme.

Raising £60m in 2021, Ultraleap chief executive Tom Carter praised its potential for “metaverse” technologies as the company sought to “remove the boundaries between the physical and digital worlds”.

Since then, major tech companies have been cool with the concept of the “metaverse,” a kind of 3D digital world that spans virtual reality and social media.

Despite Apple’s tens of billions of dollars in investment for its Vision Pro and Meta headsets for its Quest products, virtual and augmented reality products remain niche.

Global sales were around 9.6 million units by 2024, according to Trendforce data, up 8.8% year-on-year. IDC data, cited by Ultraleap, said there was a 67% decline in shipments in the first three months of 2024 alone.

The story continues