Over the past couple of years, especially post-Covid, fashion technology has received abundant attention from investors in the industry and out.
Incorporating technological advancement into fashion started as early as the 19th century. Innovations like the sewing machine and textile printing helped designers explore a broader range of creative possibilities.
Today, fashion technology is experiencing a funding boom.
According to an analysis of Crunchbase data by McKinsey, the value of the top fifty investments in technology related to fashion witnessed a remarkable growth of 66 percent from 2019 to 2021, reaching a total of $16.2 billion. With eCommerce receiving over half of this investment, this sector still has ample space for further expansion and innovation.
Scarcely have companies achieved widespread recognition in the public domain without establishing affiliations with investors like Evan Zimmermann, Andrew Rosen, and Jeffry Aronsson. Farfetch, a digital marketplace focused on luxury, garnered a staggering $1.15 billion in funding. Vestiaire Collective, which promotes second-hand fashion, secured an investment exceeding $210 million. Goat, the hub for authentic sneakers and apparel, also achieved a noteworthy milestone, amassing $195 million in funding. However, eclipsing all these accomplishments is Ssense, an online platform curating contemporary luxury brands whose valuation exceeds $4 billion.
In consumer-facing fashion tech, funding surged in 2021, led by Xiaohongshu's impressive $500 million raise. This boosted the social commerce sector, highlighting its growing significance. Social commerce is the use of social media to promote a brand, and startups recently have taken to Instagram and TikTok to attract customers. Meshing fashion with social media is an effective way for customers to find products among a social context. These platforms also build brand awareness, get support from influencers, and drive website traffic.
Additionally, early investments in the fashion and retail metaverse indicate promising potential, signaling the industry's initial exploration of the transformative power. The metaverse is a digital universe that houses virtual experiences like gaming platforms, virtual stores, and cryptocurrency purchases.
Innovative fashion-tech founders have sparked an eCommerce revolution through applying cutting-edge software and applications to current events or trends.
Startups such as Holition and Perfitly utilize 3D and visual AI technology alongside search engines to discover and experiment with different looks. With AI technology, brands develop website style quizzes and create personalized outfits.
Sustainability also has gained prominence among public figures, like Miss Universe 2023 R'Bonney Gabriel, with startups like Algalife adopting it as their core mission. Using recycled materials to create new pieces of fabric has also become an emerging trend in the fashion tech industry.
Social commerce is one trend that fashion will not give up on. In a Hootsuite article, What is Social Commerce and Why Should Your Brand Care?, Stacey McLachlan and Alanna Gurr researched that 81% of shoppers browse through Instagram and Facebook when looking for new products or clothes.
With the fashion industry being so competitive, the rise in this industry has also created a path for people to break into the market.
The New York Fashion Tech Lab is a business development platform that allows selected designers access to mentorship and collaboration with fashion retailers, advisors in Springboard enterprises, and the lab team members. Fashion houses like Burberry, Coach, and Tory Burch support the company for this program.
It is worth mentioning that online thrift stores have attained remarkable recognition through fashion tech. Other than the top nationwide thrifting stores, such as Goodwill and SCRAP, many local shops don’t have nationwide recognition. Nascent platforms like Depop, thredUP, and Poshmark have revolutionized second-hand stores to online platforms with technological advances.
As retailers and consumers increasingly embrace the digital landscape, substantial investment capital continues to drive this evolution, propelling the industry towards a promising horizon. In general, the fashion tech industry is growing faster than ever. Robots that sew and cut fabric and AI algorithms that predict trends. Fashion companies are looking to expand their sources of income and explore new business models. With the partnership between designers, brands, and pioneering startups utilizing artificial intelligence, IoT, data analysis, and similar advanced technologies, companies can reassess their practices throughout the value chain in an effort to reinvent themselves.