1Mby1M Virtual Accelerator AI Investor Forum: Felix Hartmann, Hartmann Capital (Part 2)

Sramana Mitra: So, you’ve already laid out your investment thesis. Just a couple of quick things. How big is Fund Two right now?

Felix Hartman: It’s a $50 million fund. We’ve already closed the first $10 million and have seven companies in the cohort. The goal is to back 40 companies at the pre-seed to seed stage.

Sramana Mitra: What check sizes are you writing at that stage?

Felix Hartman: Fund One was deal-by-deal, which we didn’t love. You often learn the most about a company after investing. So, for Fund Two, we’re standardizing checks: $300K initial investment per company, with $1–2 million reserved for follow-ons in the top 20% of companies. We want to see how founders deal with challenges, pivot, and communicate post-investment.

Sramana Mitra: Would you approach follow-ons differently in a hotter market?

Felix Hartman: Possibly, but the current lull allows us to take our time and follow on without overpaying.

Sramana Mitra: What is the geographical focus of your investments?

Felix Hartman: So far, we’re focused on the U.S. and Europe. We’d only invest in regions like LATAM or India if we had someone on the ground to meet entrepreneurs and do proper diligence.

Sramana Mitra: Let’s talk about some investments that are showing strong product-market fit and repeatability.

Felix Hartman: One standout is DressX, the top digital fashion marketplace. It fits our “live after work” thesis and capitalizes on the massive market for in-game wearables. Kids today care more about what their avatars wear in virtual spaces like Roblox and Fortnite.

DressX partners with major brands—Adidas, Prada, etc.—to digitize their fashion and distribute across platforms like Roblox, Meta, and Snapchat. They’re doing more volume than anyone else in their space and plan to raise a Series B later this year.

What’s interesting is they combine scale with tech. They’ve integrated AI tools that let users see digital outfits on themselves via photos.

Influencers can do one photoshoot and overlay brand clothing afterward. Plus, anyone can now design digital fashion, possibly getting discovered or staying entirely in the digital realm. They’re also enabling digital ownership via NFTs.

It’s a unique niche solving real, fast-growing market needs in digital consumption—with cutting-edge tech and a first-mover advantage.

Sramana Mitra: So Felix, I want to double-click on something in what you described—this very interesting business. When kids go into the digital world and are looking for outfits, are these outfits designed for avatars, or do they resemble real human clothing?

Felix Hartman: Interestingly, platforms like Roblox and Fortnite predominantly use a human form factor. The avatars look like humans, albeit in lower-resolution graphics, especially on Roblox.

What’s fascinating is that while you’d expect people to buy crazy fantasy outfits in virtual worlds, that’s not always the case. In fact, the best-selling item on DressX is just a basic t-shirt with “DressX” printed on the front. It’s like the digital world’s version of a Supreme t-shirt.

Even in virtual spaces, people want to represent themselves. For instance, when I created my avatar on Meta, I wanted it to look like me and reflect my personal style. Each platform offers free items, but many users opt for premium ones—these are microtransactions, usually priced between 49 cents and $2.

From the producer’s perspective, the margins are massive. Once the design is created, the only cost is a platform fee—Meta, Roblox, etc. For in-house (first-party) designs, creators can retain up to 70% after store fees.

Sramana Mitra: What about brands like Adidas, Nike, or fashion designers? How do they participate? Is it mainly branding or are they also generating revenue?

Felix Hartman: Once it’s a third-party design, the creator earns royalties. So yes, it’s both a revenue-generating and branding opportunity. Some digital fashion designers rose to fame during the 2021 NFT boom by leveraging digital fashion, which later led to traditional fashion contracts.

It’s a major brand-building tool. Big brands—from Coca-Cola, which once partnered with DressX, to influencers like MrBeast—use these platforms for 24/7 omnipresent branding. For instance, Coca-Cola distributed bottles with QR codes that unlocked digital wearables.

We don’t focus solely on digital fashion, but DressX stood out as a category leader. We’ve been working with them since 2022.

In 2022, DressX sold about 200,000 items; in 2023, over 2.1 million; and in 2024, more than 78 million items.

That’s real traction and user engagement, especially with Gen Z and Gen Alpha. Roblox alone has seen rapid growth, with around 350 million users reported recently—more than the U.S. population. Whether those are daily or monthly active users, it’s still massive.

Sramana Mitra: It’s huge. You have a question from the audience. Sunny is asking, “Does it allow people like me to design an apparel and publish? If someone buys it, then do I get a share of the revenue?” Is that the model there?

Felix Hartman: Yes. You can do that.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: Felix Hartmann, Hartmann Capital
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