Can Crowdfunding Work in Art Investment?

By now, crowdfunding is just another investment tool — like any other, it has its benefits and disadvantages as a source of capital.

But the concept of allowing for individual investors of all experience levels has proven its worth, especially as fintech integrates with other industries: like the art world, for instance, through startups like Arthena.

Put simply, Arthena allows individuals to invest in art via crowdfunding.

“Arthena is the first product of its kind; the art fund industry is in its infancy, and has great potential for growth” said Arthena Founder and CEO Madelaine D’Angelo, adding that art investment is effective tool for balancing risk and diversifying an individual investor’s portfolio. “Having a platform like Arthena allows us to democratize investments and appeal to a younger class of investors who want to play an active role in investing their portfolio.”

According to Arthena, the art market has been growing year over year 7% worldwide, and 25% per annum in the US. Currently, $1 trillion of art assets is estimated to be owned by high-net-worth individuals, the company said.

Begun in 2013 by D’Angelo, who worked as a former art appraiser and consultant before founding Arthena, the platform is said to offer a more steady investment than commodities like oil, for example.

Traditional art funds rely on advisers to purchase art for investment, while Arthena takes a quantitative approach by selling funds to individuals with a minimum investment of $10,000 through the platform. This is much like how, say, Prosper makes available pools of loans for investment by individuals.

Arthena also allows private wealth managers and institutions to sell investments in Arthena to their clients, as long as the wealth manager or institution commits to a minimum buy in of $100,000. Arthena appears to work on an institution level because investors can see what works were acquired and what is their current valuation, as well as see the total amount of investment in art.

“We’re giving people a chance to invest in what is traditionally the market with the highest barrier to entry, and the strongest historical returns,” said D’Angelo, who noted that currently, the art market is doing phenomenally well —and has been doing phenomenally well for years, even through the 2008 financial crises, where it rebounded faster than any other market.

To learn more about crowdfunding and other fintech trends, join us at Bank Innovation Israel, November 1-3. Register here

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