Backed by HSG and Hillhouse Capital, a Shanghai-based star company is gearing up for an IPO.

After selling over one million AR glasses, XREAL recently set its sights on the Hong Kong stock market.

XREAL was founded in 2017 by Xu Chi, an alumnus of Zhejiang University, and others. It is known as one of the "Four AR Dragons" along with Thunderbird Innovation, Rokid, and Yingmu Technology. As the first company among the "Four AR Dragons" to officially pursue an IPO, XREAL is expected to become the first listed company in the smart glasses industry.

Throughout its development, with the support of numerous investors, the company's valuation has reached approximately 5.7 billion yuan.

Sequoia China, Hillhouse Capital, Hongtai Fund, Jinpu Investment, Alibaba, Kuaishou, CICC Capital, Huachuang Capital, iQiyi, Shunwei Capital, Everbright Holdings New Economy, TSL Smart, Wuxi High - tech Zone Investment and Control Group, CPE Yuanfeng, China Internet Investment Fund, SenseTime, NIO Capital, Yunfeng Fund, Luxshare Precision, Pudong Venture Capital Group, Gentle Monster, etc., are all its shareholders.

Zhejiang University Alumni Build a Shanghai Star Company

XREAL was born when the market was booming.

In 2014, Facebook (before it was renamed Meta) finally acquired Oculus for $3 billion, which became a milestone event in the VR/AR industry. The following year, after Microsoft released the HoloLens, consumer - grade VR/AR products began to emerge rapidly in the market and received a lot of attention.

At that time, Xu Chi, who was working at NVIDIA, believed that the HoloLens was an epoch - making product and chose to join the American AR company Magic Leap. This work experience allowed him to come into contact with many cutting - edge technologies and convinced him that AR would be a huge track capable of changing the world in the next ten or fifteen years.

Seeing that friends without VR/AR experience were preparing to start businesses and getting financing, Xu Chi, who judged that the industry would explode in a few years with the full popularization of 5G, realized that this might be his last chance to return to China and start a business. "At that time, I thought that there must be someone who understood this industry coming back from abroad."

After obtaining his doctorate from the University of Minnesota Twin Cities, Xu Chi, who graduated from the Zhu Kezhen College of Zhejiang University as an undergraduate, founded the predecessor of XREAL, Nreal, in Shenzhen in January 2017 with Xiao Bing, also an alumnus of Zhejiang University. They focused on AR glasses, which are expected to become the next - generation computing terminals, and thus embarked on the entrepreneurial journey.

In 2019, they launched their first - generation product, Light (named X in China). It not only defined the world's first AR product in the form of glasses but also officially brought AR glasses into the consumer - grade era at a price of $499, and was well - received by overseas operators.

However, the high - flying Nreal soon got involved in a lawsuit. In the same year, Magic Leap accused Xu Chi of stealing secrets and using them to manufacture AR devices. After a year of responding to the lawsuit, the local judge finally dismissed Magic Leap's accusation due to insufficient evidence, clearing the way for the company to expand overseas.

With the help of operators in South Korea and Japan, they enabled many users to directly experience the company's products. In 2020, Nreal also released NebulaOS, the first system that brought system - level spatial interaction capabilities to AR glasses. Although it was well - received by developers, due to not meeting consumers' expectations, only over 20,000 units of Light were sold in the overseas market in 2020 and 2021.

This also made Xu Chi realize that consumers only care about experience upgrades. In the early stage of the VR/AR industry, a certain number of terminals need to be sold first to form an ecosystem. "When the number of terminals is very small, even if there is a killer app, it won't work because there is no amplification effect, and developers can't get benefits."

Based on previous experience and accumulation, Nreal released the entry - level product Air in 2022. This device, which offers a wearing experience similar to ordinary glasses and focuses on scenarios such as immersive movie - watching, console gaming, and mobile office, became their first product to achieve large - scale market commercialization. Its sales exceeded 200,000 units within a year after its release.

The success of the Air product further accelerated the company's growth. For better development, Nreal not only changed its brand name to XREAL in 2023 but also moved its headquarters to Shanghai two years later. According to them, the company's suppliers are distributed in many cities in the Yangtze River Delta, and the relocation can further improve product manufacturing efficiency.

After nine years, XREAL has finally become a globally well - known AR glasses company and is aiming for the Hong Kong stock market. According to data from iResearch, if calculated by sales revenue, XREAL ranked first in the global AR glasses market from 2022 to 2025.

Sell Over One Million AR Glasses, with Annual Revenue Exceeding 500 Million

To date, XREAL has the Air series, One series, and Light - Ultra - Aura product line, covering from entry - level spatial display products to next - generation spatial computing products.

Compared with the Air series, which can be connected to mobile phones, PCs, and game consoles, the One series has stronger display performance and interaction capabilities. For the Light - Ultra - Aura product line, they are about to launch Project Aura, which integrates enhanced spatial computing and multi - modal AI capabilities and can run on the Google Android XR platform.

In their view, the company's products are all based on the same technological direction of edge computing, spatial interaction, and multi - modal AI. The launch of Project Aura will promote the development of AR glasses into AI - empowered hardware with enhanced situational understanding, natural interaction, and task - execution capabilities.

The outbreak of the new round of AI revolution made Xu Chi realize that the real next - generation interaction is for humans to communicate efficiently with intelligent agents like humans communicate with each other. He believes that glasses are the best natural AI carriers. "Because when you add eye - tracking in the future, glasses may be the only device that can know what your focus is."

With the recognition of many users, the company has sold over one million AR glasses globally, and its revenue has increased from 390 million yuan in 2023 to 516 million yuan in 2025. Although most of their current revenue comes from the sales of AR glasses, with the birth of new terminals led by new interaction paradigms, XREAL believes that its ultimate business model is not to sell hardware.

In an interview, Xu Chi believes that the core value of smart glasses lies in that it is the best form to share high - quality context and attention with models. He also judges that the closer the device is to the user on the edge side, the stronger the attributes of the hardware or the entrance will be. In his opinion, in the future, users may not buy hardware but are willing to pay a monthly subscription fee for the assistant service.

Previously, due to the judgment that the experience of AI glasses needed to be polished, XREAL had never launched AI glasses. However, as the integration of AI and spatial computing deepens, the company has been continuously promoting technological exploration and product planning in related directions and plans to launch products for the market at an appropriate time.

Looking at the prospectus, from 2023, they have invested more than 600 million yuan in R & D in three years, achieving the design and integration of key technologies from optical engines, edge - side co - processor architectures, algorithms to operating systems. However, affected by factors such as R & D, XREAL is still in a loss state, with the cumulative adjusted net loss exceeding 1 billion yuan during the same period.

However, benefiting from the scale effect and high - end strategy, the company's gross profit margin has increased significantly from 18.8% in 2023 to 35.2% in 2025. In addition, according to iResearch's forecast, the global sales of AR glasses will soar from 800,000 units in 2026 to 22.2 million units in 2030.

This also means that XREAL, which is in a leading position in the market, still has great development potential.

Sequoia and Hillhouse Are Optimistic, Valuation at 5.7 Billion Yuan

Throughout its development, XREAL has completed nine rounds of financing.

Before Xu Chi founded the company, he met his angel investor, Jin Peng. This former partner of EC Capital not only provided him with suggestions on entrepreneurial directions but also took charge of financing, strategy, and commercialization as a co - founder after XREAL was established.

To express gratitude for Jin Peng and ROC Ventures' significant contributions to the company's establishment and early business development, Xu Chi transferred part of his equity to Jin Peng at a price of 805,000 yuan in February 2017. Due to the complexity of overseas investment, this transaction was not completed until August 2018 when XREAL transferred the equity to ROC Ventures.

Although Xinghe Wealth, controlled by Shen Yanjie, the managing partner of Hongtai Fund, did not buy some of XREAL's old shares from ROC Ventures until December 2021, Hongtai Fund had contacted them as early as the company's establishment and became a shareholder along with Shunwei Capital and Shanghai Linnan in September 2017.

At that time, Xiong Weiming, the founding partner of Huachuang Capital, got to know Xu Chi. According to a report in "China Entrepreneur", Xu Chi told Xiong Weiming that XREAL wanted to be the Chinese version of Magic Leap. Since many AR companies wanted to be like Magic Leap, Xiong Weiming didn't take Xu Chi's words seriously.

As the company successfully developed lightweight AR glasses, Xiong Weiming judged that as long as they didn't make basic mistakes, they would probably succeed. In August 2018, XREAL completed its Series A financing led by Huachuang Capital, with investors including iQiyi, Shunwei Capital, Hongtai Fund, Shanghai Linnan, etc.

After releasing the world's first commercially available consumer - grade AR glasses, they received investments from Huachuang Capital, Shunwei Capital, Everbright Holdings New Economy, iQiyi, and TSL Smart in March 2019. The following year, XREAL signed an agreement with the Wuxi High - tech Zone to establish its first R & D and mass - production base for optical modules in Wuxi.

Even though its development was affected by the volatile macro - environment, the company still launched its self - developed 3D interaction system in 2020 and promoted overseas commercialization. In September of the same year, they received more than $38 million from Sequoia China, Hillhouse Capital, Jinpu Investment, Kuaishou, CEC CICC, etc.

In June 2021, XREAL achieved self - control of core components and large - scale mass - production capabilities and completed the Series B1 financing led by CICC Capital's private placement and the investment from Wuxi High - tech Zone Investment and Control Group. Three months later, thanks to good performance in commercialization and the overseas market, their valuation almost doubled compared with the previous round, reaching $570 million.

At that time, the company completed nearly $125 million in financing, with investors including Sequoia China, Hillhouse Capital, CPE Yuanfeng, Jinpu Investment, China Internet Investment Fund, SenseTime, NIO Capital, Yunfeng Fund, Alibaba, Hongtai Fund, Visionox, Taifu Yuanjian, Zeng Fangqin, the chairman of Lingyi Precision, etc.

As one of the leading investors, Zhu Yan, the managing partner of NIO Capital, believes that with the maturity of optical technology and the leap in terminal computing power, augmented virtual reality is expected to become a new terminal for smart life. "We are optimistic about the application of AR/VR glasses in different scenarios in cars, especially the new possibilities combined with in - car entertainment."

After receiving $50 million in financing from Alibaba and Gentle Monster in March 2022, XREAL completed a Series D financing of over $67 million in January 2026, with investors including Zhuhai CosMX, Nantong Yihe, Xichen Capital, Wuxi High - tech Zone Investment and Control Group, Zhongxin Investment Development, Xinwei Capital, Luxshare Precision, Pudong Venture Capital Group, etc.

When the company was conducting its Series D financing, Pudong Venture Capital Group invested in them in May 2025 and successfully attracted XREAL's headquarters to Pudong, Shanghai. It also provided support for the company in terms of technology R & D, production testing, talent support, and driving the upstream and downstream of the enterprise.

With the support of numerous investors, XREAL has finally reached the door of the Hong Kong Stock Exchange. After years of hard work, Xu Chi has also received rich rewards. Based on a rough calculation of the valuation of $833 million (approximately 5.7 billion yuan), Xu Chi, who holds about 26.74% of the shares before the listing, has a net worth of over 1.5 billion yuan.

Reference Materials:

1. "The Metaverse Is Booming, and Giants Are Circling. This Company in the Limelight Wants to Be the New 'DJI'", China Entrepreneur Magazine

2. "Exclusive Interview with Xu Chi of XREAL: I Have a Mobile Phone and a Computer. Why Should I Use AI Glasses to Replace Them?", ifanr

3. "Xu Chi of Nreal: In the Future, 1 Billion AR Glasses Will Be Worn on People's Heads", GeekPark

This article is from the WeChat official account "Dongshisi Tiao Capital" (ID: DsstCapital), written by Lu Zhigao and edited by Wang Qingwu. It is published by 36Kr with authorization.