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.
The Fabricant: A co-created “wardrobe of the metaverse”
With its recent $14 million in funding, led by Greenfield One, with participation from Ashton Kutcher and Guy Oseary’s Sound Ventures, Red DAO and others, Amsterdam-based digital fashion house The Fabricant intends to pivot. The company, founded in 2019, is becoming a digital fashion and NFT creation studio whose technology is available to other creatives. In addition to its Series A round, The Fabricant, which counts H&M and Adidas as past clients, has also received a “mega-grant” from Epic Games, whose Unreal Engine software The Fabricant uses. The original model of client services “always held us back from becoming the digital fashion house we imagined”, Murphy says.