Online Art Investment Platform Masterworks Gets Boost from Investors and $1 B. Valuation
Masterworks, an online investment platform founded in 2017 that sells shares in blue-chip art, has received $110 million in a first round of funding from New York–based venture fund Left Lane Capital and other investment firms, including Tru Arrow Partners and Galaxy Interactive. With this round of funding, the company said it was now valued in excess of $1 billion, and marks a milestone for the platform, which has seen its member base grow steadily over the past year.
The members-only platform, which has a staff of 100 employees with headquarters in New York’s Tribeca neighborhood, allows investors to buy and sell shares of major works of art by the likes of Jean-Michel Basquiat, Keith Haring, and Pablo Picasso, among others.
The platform seeks to tap into the art asset class that is estimated at $1.7 trillion, according to Deloitte’s 2019 Art and Finance Report. The market for contemporary art has appreciated at a rate, for more than two decades, that outpaces that of traditional assets like real estate.
“Art is among the largest asset classes remaining that has never been securitized,” said the platform’s founder Scott Lynn. The New York–based entrepreneur will allocate the funds from the investments to growing the business, including costs around distribution and financial advisors.
Lynn, a seasoned art collector, is no stranger to the industry, having amassed a collection that includes major postwar artists like Clyfford Still, Barnett Newman, Mark Rothko, and Willem de Kooning.
Tru Arrow Partners head Glenn Fuhrman, who is also one of the world’s top art collectors and the founder of the FLAG Art Foundation in Chelsea, noted that art investing at the highest levels has historically only been accessible to the ultra-wealthy. Now, Masterworks is looking to disrupt the trend by bringing fractional investment in art into the mainstream, which Fuhrman thinks will meet a demand that has long been unmet.
In an interview, Furhman told ARTnews, “I have a strong belief that art is a legitimate and very viable investment asset class and that it just needs to be democratized.”
Harley Miller, Left Lane’s founder and managing partner, said in a statement that other investment firms have poured capital into other “alternative investment spaces,” which range from sports and pop culture memorabilia to retail—and now art. “We were keen to pursue an investment into a company playing in an asset class that was fundamentally much larger, more unique, and with proven appreciation rates over decades,” he said.
Unlike luxury collectibles, Furhman believes that the historical value of fine art makes it a more attractive asset. “Ultimately, art has stood the test of time, as being something that can appreciate over centuries,” he said.
As of October, more than 200,000 members have signed up for Masterworks, which also includes data on historical sales to better gauge what an artists’ work might return. Of that group, some 15,000 members have purchased shares in artworks that are traded on the platform. The company acquires each individual work and registers it with the U.S. Securities and Exchange Commission (SEC). From there, investors are able to buy shares in the pieces.
The platform’s investors say that Masterworks, which has a low minimum financial requirement to invest, has the potential to draw a broader audience to investing in art. Sam Englebardt, a partner of Galaxy Interactive, said, “Financial inclusion and empowerment are core principles around which Galaxy was founded.”