Summary:

While augmented reality may have been one of the buzziest tech topics of the year, most everyone can agree that it’s a next-generation technology trying to find its way into the present. Tonchidot has raised $4 million to do just that.

Augmented reality — the idea of overlaying the virtual world onto the physical world, typically via the lens of a mobile device — may have been one of the buzziest tech topics of the year, yet most everyone can agree that it’s a next-generation technology trying to find its way into the present.

Back in September 2008, a Japanese company called Tonchidot used a snazzy demo and some language barrier slapstick to become a crowd favorite at the TechCrunch50 conference. The company’s Sekai Camera overlaid data about products and venues in real time on top of the iPhone camera’s viewfinder. “Join us!” execs told the crowd. “Look up, don’t look down!” It was a crack-up. The company, which recently deployed an actual product, said today it’s raised a $4 million Series A round from DCM and seed funder Itochu Technology Partners Ventures.

Sekai Camera overlays text, photos, voice notes from users, content providers and advertisers, showing them as quivering, hovering icons as you look through your phone camera to the world. Its iPhone app was launched in September in Japan, where it generated a self-reported 100,000 downloads in the first four days. A global version, with added social and user-generated features, is waiting for approval for Apple, the company said. For proof that augmented reality is like living in a video game, look no further than the embedded Sekai Camera video demo. Turn up the volume, because even if the application isn’t that impressive yet, the soundtrack totally makes you want to level up.

Dutch AR competitor Layar raised around $1 million last month for its apps on the iPhone, Android and (forthcoming) Symbian. As of October, that company told VentureBeat it has 250,000 total downloads and 100,000 unique users per week. AR startups face a range of challenges, including inaccurate location data and patchy existing content, as Colin Gibbs detailed in an in-depth piece on augmented reality for GigaOM Pro (sub req’d).

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