The crypto industry is in a state of upheaval, with cryptocurrency prices plunging, slowed hiring or layoffs at companies and the NFT market contending with scams, hacks and cooling interest for many projects. Even so, plenty of investors are still banking on the long-term potential of web3 — basically a future internet with a decentralised architecture based on blockchains where users have more ownership of their digital goods and data.

In fact, while investors are getting more cautious with their money in the tech sector broadly, web3′s attraction doesn’t seem to have suffered to the same degree. Andreessen Horowitz recently raised $4.5 billion for its new crypto fund. Ledger, which makes hardware for securing crypto assets, just partnered with Cathay Capital on a $100 million fund. Matthew Ball, a leading thinker on the metaverse, teamed up with Multicoin Capital and Bitwise Asset Management to launch a new index fund focused on crypto. The suggestion is that these investors are still betting on web3′s future.

VCs with their hands in fashion are no exception. Among those I’ve spoken to recently who are exploring web3 are Natalie Massenet, founder of Net-a-Porter and co-founder of venture firm Imaginary Ventures. Another is Frederic Court, founder of Felix Capital, which has invested in companies like Farfetch and just raised $600 million in new funds to back companies in web3 and other spaces.

Massenet and Court have solid track records of predicting how shoppers will connect with and buy fashion. They also have their own ideas about where the big opportunities lie in web3.

Much of the talk around fashion and web3, for instance, has focused on virtual goods. Because NFTs allow for verifiable ownership of digital assets, the thinking goes that they present a giant opportunity for sales of virtual fashion that the owner could use across a variety of digital platforms, from video games to social media. There are big technical challenges to overcome before this idea is anywhere near reality, but that’s the concept.

One of Massenet’s big web3 bets, however, is aimed squarely at physical goods, since that’s still where fashion brands make all their money.

In February, her firm led a $10 million funding round for Eon, a company creating digital IDs for physical products. While Eon is not a web3 business specifically, its IDs can be logged on a blockchain, and Massenet sees it as unlocking the capabilities of web3 in the physical world. As she described it, retail is steadily being disintermediated. Shoppers have more ways to connect to products than ever before, without having to rely on big retailers to gather everything in one place. The continued growth of resale means more peer-to-peer commerce where no middle man is even needed. Digital IDs can make each product the centre of its own suite of information and services, like a decentralised form of retail.

At Felix Capital, meanwhile, Court told me their interest “is less about empowering existing brands to move onto blockchain but more about empowering new native brands to emerge on these platforms.”

One brand he said they wanted to invest in though they missed the opportunity is RTFKT, the maker of sneaker and fashion NFTs bought by Nike last year.

In his opinion, web3-native brands are going to be more relevant to the young shoppers spending much of their time playing video games and using avatars to express themselves.

There is one theme that unites many of the companies investors are looking to back in web3 and also metaverse-related spaces: they provide tools that make the experience simpler for brands or consumers.

Court pointed out that the user experience of web3 is still clunky and complicated, limiting the audience for now mostly to what Court affectionately called “geeks.” One area of emphasis for Felix Capital is making it easier for the average consumers to have access.

Similarly, if more brands want to make metaverse plays, they generally need to find partners who can build the digital assets and experiences for them. When I was talking to investors for BoF’s recent State of Fashion: Technology report in partnership with McKinsey, both Pierre Denis, a fashion-tech investor and former chief executive of Jimmy Choo, and Reina Nakamura, a general partner at Lyra Ventures, mentioned Threedium, a company that lets brands easily create 3D and augmented reality assets. Nakamura called it a “backbone of everything 3D.”

RSTLSS, a company founded by designer Charli Cohen that aims to make it easy for brands to create NFT wearables for use across a variety of online platforms, has gotten the backing of the aforementioned Matthew Ball as well as others like Paris Hilton and gaming-centric VC fund Bitkraft Ventures.

There’s still a lot of work to be done if web3 is ever going to become the next evolution of the internet, and as is often pointed out, many of those who got rich during the 19th century gold rush in the US were those providing the pickaxes and shovels.

Felix Capital is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder’s documentation guaranteeing BoF’s complete editorial independence.