The Metaverse Already Has A Diversity Problem: Where Are The Female NFT Investors and Creators?

Over the last few months I’ve met with everyone from crypto natives to traditional, “real world” art investors in an attempt to wrap my head around where the NFT market is headed. I’ve thought through some basic NFT investing frameworks, how NFTs can be leveraged by consumers as financial assets and wearables, and am excited to say that we’ve made our first NFT infrastructure investment at Flybridge (more on this to come).

As I dig deeper into the category and familiarize myself with the main players (and loudest voices), both from an investor and creator perspective, something has quickly stood out: a glaring lack of diversity.

Honestly, I can’t say I’m surprised. NFTs sit at the intersection of two historically white and male dominated industries: visual art and crypto. That said, if the NFT community is intentional about making investing accessible while the market is still relatively young, things could turn around.

Before diving in, a bit of diversity-related context for the art market. (The lack of diversity in crypto is known and well documented; a great overview can be found here).

The Visual Art Market:

The art market may seem relatively inclusive, at least in comparison to other industries. In reality, however, it suffers from many of the same discriminatory undertones as technology, finance, and sectors generally perceived as lacking diversity. The origins of the problem are structural in nature (e.g. women were barred from receiving art degrees until the 1870s). These discriminatory practices have also been compounded by a host of more “discrete” actions (e.g. requiring women to create works pertaining to the home, while men were encouraged to experiment with new mediums and content). (source) Today, little has changed. The top 18 museums in the US have collections that are 87% male and 85% white. (source).

There are some interesting parallels between the traditional art market and the NFT market regarding diversity. For both, the institutions impacting which pieces are deemed “valuable” are overwhelmingly male, and likely overwhelmingly white. In the traditional art world, these “entities” are the museum curators. Interestingly, while the overall gender breakdown of art curators is somewhat balanced, “just five of the 33 most prominent art museums — those with budgets greater than $20 million — have women at the helm.” (source) Unsurprisingly, those museums have historically represented male artists, who in turn become more successful than their female counterparts, and the cycle continues.

The NFT market is less “curated”, and in fact decentralized and community governed by nature, at least for now. But, because most NFT investors and influencers are male, and opt to invest overwhelmingly in male NFT creators, the industry has experienced many of the same trends (more on this below…)

The NFT Market:

Like the visual art market, the bulk of NFT sales — roughly 77% — are flowing to male creators while only 5% of sales go to female artists (16% are uncategorized in the study). There are a few key reasons for this.

First, while NFTs — like pieces of art — are highly diverse when it comes to content, medium, etc. “avatars” (e.g. an icon/figure representing a person/animal) are a popular subgenre. Investors often replace their profile photos on Twitter, Instagram, and other social platforms with images of their NFT avatars. I, too, am guilty of this trend. (On more “NFT native” platforms like Discord, using an NFT as your profile photo is the default). As NFTs become the profile pictures of our digital-first world, or metaverse if you will, people will likely continue gravitating towards NFTs that resemble them, or share some of their physical attributes.

It’s relatively easy to extrapolate how this gets problematic. If most of the NFT community is male, and/or white, there is market pressure for artists to create NFTs that this user base will relate to. Let’s take Crypto Punks for example. Only 3,840 of 10,000 Crypto Punks in the collection are female, theoretically making them more rare. Yet, the most expensive Crypto Punks generally tend to be (or appear) male. Analyzing NFT prices in regards to race is more challenging, as many projects one, contain a mix of people, aliens, animals, etc. and two, don’t break down skin color or race as an image attribute. Anecdotally speaking, however, it seems that for “human” avatars, lighter skin tones and higher prices are often correlated.

Beyond the fact that lighter, male NFT avatars are becoming more valuable (and financially benefiting their likely male investors), this preference for lighter, male avatars also creates issues regarding how the market is publicly perceived. Like many new asset classes, getting involved with NFTs, from a standstill, is daunting. This intimidation is strengthened by the lack of non-white, non-male avitars visually representing the industry, as well as the lack of diversity of investors.

Interestingly, much like with the traditional art market, which is heavily dominated by a few institutions and the artists they choose to represent, wealth creation within the NFT space is also highly concentrated. As of November 2021, 55% of NFT revenue was generated by just 16 artists. (source) While less concrete data exists around wealth creation for the top NFT investors, this community is also likely very small.

Why Does This Matter?

There are a number of reasons why the NFT market’s lack of diversity is problematic. Personally, I think that one of the biggest issues is that women and minorities are going to get left behind, yet again, when it comes to wealth creation at the earliest stages of a new asset class. We’ve seen this with everything from traditional securities to angel and private market investing. Men start sooner, and execute at a higher frequency, than their female counterparts. The problem is more severe when you incorporate race. As of 2020, 29.5% of angel investors were women, while only 5.3% were minorities. (source)

While we need to encourage diversity of participation in NFT investing, there’s also the question of how to encourage investments in “diverse” NFTs. I’ll use my own thought process as an example here. Let’s say there’s a new, compelling NFT project with both male and female avatars. While I’d love to invest in a female NFT avatar, if the project appreciates in value, a male avatar is likely a better bet, financially speaking. So, what do I do? Play into the problem? Or, work to theoretically help alleviate it but possibly at a personal, financial cost?

One of the few successful, female oriented NFT projects — “World of Women”

This issue becomes more complex due to the unregulated and decentralized nature of NFT investing. The community drives price and value, both at the project and individual NFT level. So, to an extent, until there is critical mass in favor of placing higher value on “diverse” NFTs, those looking to support diverse projects while also optimizing their investments for financial returns are in a tricky spot.

What’s Next

Overally, I’m hopeful that as NFTs continue to be regarded more holistically (e.g. for utility as well as for financial returns) the market will become more diverse. It’s widely recognized that women control the bulk (e.g. 70–80%) of consumer and household purchasing decisions. So, you can imagine that as these transactions start occurring in digital worlds via NFTs, we’ll organically see more women enter the market.

I also think that in 2022, we’ll see a host of new NFT use cases and subverticles, such as ecommerce, which will draw in a more diverse pool of investors. (e.g. as opposed to the male-dominated gaming NFT vertices). We’re already starting to see momentum here, with a host of ecommerce brands ranging from Loreal to Gucci getting into the NFTs and metaverse. Nike’s recent acquisition of RTFKT is particularly exciting because, while the brand doesn’t share specific demographic metrics, I’d guess their customer base is relatively diverse across both gender and race. Moreover, unlike some of the more gimmicky brand involvements in NFTs, Nike will likely be incredibly thoughtful about merging its “real” and virtual products, thus making NFTs accessible and digestible to a new cohort of consumers.

As always, if you’re interested in chatting about any of the above, ping me at julia@flybridge.com.

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Julia Maltby

Julia Maltby

Early Stage Investor @ Flybridge & X-Factor Ventures | GP @ The MBA Fund | Previously @ Underscore VC, WeWork, and Plum Alley Investments | Wharton MBA