Blockchain, Internet of Things and AI: What the newest luxury startup accelerators are investing in

Blockchain, artificial intelligence, and sustainability and raw materials are the top new technology priorities at a batch of recently formed fashion accelerators.

LVMH announced earlier this month that it will be launching an annual startup accelerator at Station F, a business incubator in Paris, and will choose 50 startups to join two six-month programs. On Friday, Farfetch announced the launch of Dream Assembly, its first in-house accelerator in partnership with Burberry and 500 Startups, a venture capital firm. It’s currently taking applications from companies and will choose up to 10 to participate in a 12-week program. Kering, a founding partner of the accelerator Plug and Play, started its second 12-week season with 15 new startups in March.

Helping to foster new industry startups is a way for retailers and conglomerates to lend their support and cash to companies they think will prove lucrative and beneficial down the line, as well as demonstrate an interest in the broad umbrella of innovation. Retail and accelerator partnerships have popped up throughout the industry: Target’s Techstars Retail accelerator will start its third program this summer; the R/GA Accelerator has partnered with brands and retailers like Nike and Westfield; beauty retailers like Sephora and L’Oréal have launched in-house accelerators to harbor relevant technology companies within their own walls. Early successes within the world of luxury accelerators include Orchard Mile, incubated by an early version of LVMH’s accelerator, and The Modist, which has received funding from Farfetch.

Each accelerator, through overarching themes as well as the startups that participate in them, gives insight into where these companies are placing their next industry bets.

“It’s very important for new companies to continue to form luxury in all shapes and sizes,” said Morty Singer, CEO of business development firm Marvin Traub Associates. “LVMH’s service explores the technology and innovation out there, where they may not be ready to invest in-house, and you can really see where the industry is headed by looking at the companies that they’re supporting.”

In luxury, startups working on supply-chain logistics technology, fabric sourcing and sustainable materials, personalization and customization through artificial intelligence, e-commerce solutions and mobile capabilities are all present across the accelerators, but blockchain and the Internet of Things make up one of the newest trends to emerge among startup initiatives. It’s one of the seven “main ideas” at LVMH’s new accelerator, titled La Maison des Startups; launched a blockchain-specific accelerator in February; last year, Kering’s sustainability-centric accelerator included blockchain startups like A Transparent Company, as the blockchain can be used to verify where materials are sourced from and where items are produced. It’s also playing a role in anti-counterfeiting efforts in online luxury.

“This isn’t something that a luxury fashion house is born knowing how to do. Brands would have to build out new teams to deliver new products and new content for connected consumers, and be continually investing in new content and experiences,” said Lauren Nutt Bello, the managing partner at digital agency Ready Set Rocket. “Already, there’s an overloading amount of data that brands don’t know how to make sense of, and some luxury companies are brands that don’t even have full e-commerce stores. They need outside help.”

The goal is to scout technology startups that could be absorbed at the brand level. While other fashion accelerators like the Fashion Tech Accelerator and XRC Labs offer potential retail partnerships as a perk of the program, retail-founded accelerators build brand partnerships in as a guarantee. At LVMH’s La Maison des Startups, the companies invited to participate will be working on projects with individual fashion houses owned by the conglomerate to incorporate new technologies and practices at the brand level. Burberry is the first brand partner of Farfetch’s Dream Assembly, and new brands can get involved down the line. Kering brands all have the option of participating in the Plug and Play accelerator, and the company’s sustainability initiative is an open-source resource for all of its owned brands. None of the accelerators promise investments to the startups, and terms for potential investments aren’t disclosed.

But building up a startup in such close proximity to brands — in some cases, legacy brands — can invite competing agendas. What incubators like XRC Labs offer is a more mixed variety of insight from experts, mentors and judges from across the industry, and in-house retail accelerators can have a one-track mind focused on their own goals, and reduce the potential for investment to a limited group. Partnerships with unbiased players in the space, like Station F and 500 Startups can help. The big trade off, of course, is access.

“When I started my company, I needed exposure to boutiques and to brands; I needed consumers I could learn from; I needed technology support and mentoring,” said Jose Neves, the founder and CEO of Farfetch.

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