As the metaverse's influence grows, digital fashion firms are hot investments. Funding money are accompanied by high-profile relationships, broader scope, and new possibility.
"Because metaverses are essentially visual and social," explains Maaria Bajwa, an investor at Sound Ventures, "digital fashion is perhaps one of the most crucial content verticals that has to be generated."
The metaverse could represent a $1 trillion market by the end of the decade, according to CB Insights, which found that in the third quarter of last year, executives mentioned the word “metaverse” a record 68 times. In 2021, more than $10 billion in venture funding went toward metaverse-related companies.
“The fashion industry will be one of the first to be the most disrupted by blockchain technology. The emergence of new business models, digital use-cases for fashion and metacommerce are contributing factors,” says Kaspar, managing director and co-founder of Magnetic, and a founding member of Red DAO, which has invested in digital fashion startup DressX and “virtual human” company Aww, among others. “Unlike the industry's response to Web2, many brands and companies are quick to see the opportunities afforded by this disruption and are embracing it at unimaginable speed.”
This is significant for fashion and retail brands that rely on startups to innovate. A report this month from Cowen managing director Oliver Chen called the metaverse “the new mall”, while noting the need for reducing friction in payments and technology and for easy-to-use augmented reality software and hardware. “The metaverse is an early-stage reality, but there is no doubt it will be the next version of human interaction. For retailers and brands, it is important to three-dimensionalise products, partner with metaverse developers and pick a place where they want to bring customers,” Chen wrote.
Recent high-profile projects and acquisitions, like Nike’s December acquisition of “digital Supreme” brand Rtfkt, have served as tailwinds to other startups. “Rtfkt, in some ways, was a blueprint, with crazy drops and partnerships with high-quality brands. When we see a lot of those digital fashion plays doing really well in Web3, we can start to understand how there can be more than one,” Maidment says.
While many of these companies are breaking the mould, some old investment rules still apply — especially as the space becomes saturated and hype levels out. “If the experience itself isn't fun, nobody sticks around,” Mullins says. “As we enter the trough of disillusionment, it means we are starting to see old school requirements; you better know how to build a product that can capture the value of a community.”
To make sense of the fledgling business of metaverse fashion, we looked at the companies that have received recent funding rounds and their ambitions with investor backing.
