Web3 startup Spatial Labs raises $10M to connect clothing to the metaverse

Spatial Labs, a Web3 startup aiming to change the consumer experience by connecting fashion to the blockchain, today said it has raised $10 million in seed funding led by Blockchain Capital with additional participation from Jay Z’s Marcy Venture Partners.

The company was founded in 2020 by Iddris Sandu (pictured), a business entrepreneur interested in blockchain technologies and fashion. He was looking to create a solution that serves brands as an entry point between the physical world and the digital one.

To do this, Spatial developed the LNQ One Chip, a 13-millimeter microchip that can be sewn into clothing or embedded in physical fashion, such as shoes. It allows any item to be turned into a traceable Web3 asset using blockchain technology. This provides owners with a digital ledger that tracks the item’s authenticity, origin, ownership history and real-time value.

“Spatial Labs is designing next-gen technologies to connect brands to younger demographics that shop and interact with products in completely new ways,” said Sandu. “Through our technology solutions, we provide brands with rich consumer data and previously inaccessible revenue models.”

Each physical chip is connected to a nonfungible token on the Polygon blockchain. An NFT is a type of blockchain-based asset that shows provable ownership of a digital or physical item and can be transferred between parties. It can also be assigned properties, such as information and metadata, which is also stored on the chip in the clothing. Then it can be authenticated by scanning it using any device that can connect to it using near field communication.

NFTs can be used to unlock a myriad of opportunities for consumers and brands, such as loyalty programs, coupons and VIP programs. A piece of clothing with an LNQ One chip could be scanned when purchasing merchandise at a participating store to get extra discounts on the same brand’s clothing or it could be used to unlock additional content in an app on a phone that’s related to a designer or a creator related to the fashion line.

Brands can also use these chips to create fashion that can be reflected in virtual worlds as well, meaning that once consumers buy a piece of clothing with an LNQ chip in it, they can also be rewarded with a piece of virtual clothing that they can carry over into virtual or augmented reality. For example, if consumers have profile avatars in a common metaverse app or video game where fashion items are worn by their characters, they could then use the fact that they own the piece of clothing to unlock the same fashion item for their avatars or characters without having to buy it twice.

Since the chip follows the clothing, even if the piece of clothing is bought and sold, it could be scanned and discovered as it goes through different hands in secondary markets. That allows its blockchain ledger to be updated with new ownership as it changes hands. It will open up all-new ways for brands, retailers and creators to engage with their audiences.

“The consumer goods industry is at a pivotal inflection point,” explained Sandu. “Partnering with ambitious, innovative investors that align with our core ethos will enable Spatial Labs to continue to deliver the tangible innovations that brands and consumers are asking for.”

This is the second time that Marcy Ventures Partners has invested in the company, including a pre-seed funding round in 2021 that raised $4 million, putting the total raised by the company at $14 million. The company intends to use the new capital to expand its technology stack and reach more industries, including media and entertainment.