Despite Facebook's $2 billion bet on Oculus and virtual reality products from Samsung, Sony and Google, VR hasn't gone mainstream.
But the founder of HTC's Vive headset business is more bullish than ever.
Phil Chen left HTC in 2015 and is now a partner at Li Ka-Shing's Horizons Ventures and the co-founder of a VR-focused fund called Presence Capital. In 2016, Presence was the most active investor in virtual and augmented reality (AR) start-ups, according to CB Insights data.
Chen isn't at all bothered that consumer VR has sputtered out of the gate.
"The form factor is not there yet," Chen said. "The systems have been heavy, bulky, generate too much heat, all of that. There was the hype and then a trough, which we expected."
Presence has made 40 investments, with the last 20 going to VR and AR start-ups that are pursuing opportunities in areas like health, education and corporate training. These start-ups are making money and raising follow-on rounds of funding successfully, Chen said.
The Presence portfolio includes Strivr Labs, a company helping pro athletes and retail employees at Walmart experience scenarios in a virtual world before they need to make a play on the field or a tough decision at their store.
Presence's health investments include Floreo and Osso VR. Floreo uses VR interactive content to help people with autism spectrum disorder, especially kids and teens, with everything from police interactions to school work. Osso VR is a surgical training platform that also tracks a surgeon's hand movement while practicing complex procedures.
But Chen still believes that consumer VR will be big business in the coming years.
"There's a lot of reason to hope," he said. "VR hardware is constantly improving, and virtual reality storytelling is something that transcends the hardware."