Digital fashion and footwear company RTFKT revealed on Tuesday that it has raised $8 million in a “landmark” funding round in furtherance of its quest to “empower the future of fashion” by way of non-fungible token – or “NFT” – centric offerings. The round, which was led by venture capital firm Andreessen Horowitz, and that includes Riot Games co-founder Marc Merrill, Behance co-founder Scott Belsky, artist Fewocious, and former LVMH Chief Digital Officer Ian Rogers, among others – is one of the biggest (if not the biggest) in the digital fashion space, and it appears as though it may not be the last.
In a LinkedIn post on Tuesday, Laurent Ohana, a senior advisor at Ohana & Co., which co-invested in the RTFKT round with Adrian Cheng’s C Ventures, revealed that the independent investment bank is getting in on the crypto space – specifically from a luxury-specific standpoint – by way of Crypto Couture Partners. Mr. Ohana says that “after the initial excitement of seeing [the RTKFT] deal come together,” he asked himself whether “the excitement about NFTs [is] sensible,” and while “there will be mostly losers among the early entrants and successive generations of entrepreneurs will need to build a sustainable business model that will create something very valuable,” he, nonetheless, decided that this space is one worth betting on.
Introducing the launch of its new NFT-focused venture, which will act as a venture accelerator for “established and new crypto luxury brands,” Ohana & Co. states that the luxury segment has “lagged many other sectors in undergoing digital transformation” due to the belief that “luxury customers would always want the high-touch experience of luxury shopping.” However, the financial firm asserts that the appeal of NFTs is particularly striking, as the technology provides luxury brands with opportunities to reach both new and existing customers in a different way. For instance, NFTs are “an ideal bridge between physical and digital,” per Ohana, as they allow for “the simultaneous ownership of physical objects paired with their unique digital manifestation,” which could unlock added value for consumers and brands, alike, including in the form of provenance-tracing, as well as a “combination of digital assets and experiences.”
Another potential benefit offered by NFTs, according to Ohana: the appeal of the relatively novel technology to both “the ultra-wealthy, [as well as] the digitally native aspirational customer steeped in the amalgam between gaming, street and virtual cultures.” In other words, NFTs could give luxury brands another entry point to a new generation of consumers.
As for the current state of the NFT market, Ohana cites Andreessen Horowitz – which is reportedly raising between $800 million and $1 billion to back crypto startups – in stating that there are currently more than 3 million NFTs for sale, “with sales volumes growing 400x year-over-year to exceed over $100 million per week.” Meanwhile, Andreessen Horowitz announced on Thursday that it has led a $19 million round for Bitski, a Shopify-like upstart that builds custom storefronts for brands and creators, albeit exclusively in the NFT space. San Francisco-based Bitski may help to accelerate the NFT market further, as according to TechCrunch, the company, which also boasts Serena Williams and Jay Z as Series A investors, aims to “allow mainstream brands and celebrities to bypass the crypto complexity of early marketplaces, hoping to give customers like early partner Adidas an on-ramp to the NFT world that is more approachable to consumers who understand digital items but might not have fully bought into crypto.”
The Broad View: NFTs are currently “selling at a high premium” in many cases, according to a recent Nasdaq report, even after falling in price by as much as 70 percent over the past several months; CNN states that “the average price for an NFT on April 5 was about $1,256 down from more than $4,000 in late February, according to market research site NonFungible.com, [while] data from The Block, another crypto research firm, shows a similarly large decline for both prices and NFT sales, as well.” The “mania” surrounding NFTs paired with the largely speculative nature of the space is consistently resulting in the question of whether they are “a growth market with long-term potential, or an over-hyped disaster in the making?,” per Nasdaq.
Many luxury industry analysts remain heavily skeptical about the future of the buzzy tech, and its unfavorable ecological impacts have proven a (rightful) sticking point for many. Yet, at the same time, a handful of recent developments – from the recent RTFKT and Bitski rounds and Ohana’s crypto fund to the adoption of NFT-based digital passports for luxury goods tracing by a growing number of brands – seemingly make viable cases for NFTs and suggest that the tech very well might have staying power.