Masterworks Raises $110M to Offer Art Share Ownership

Masterworks Secures $110 Million to Democratize Art Investment

With traditional asset markets exhibiting concentrated gains, investors are increasingly seeking diversification. This trend has fueled the rise of tech platforms offering access to alternative investments. Masterworks, a startup specializing in fractional ownership of fine art, has reached a $1 billion+ valuation as it aims to become a leading provider of art portfolio exposure.

Series A Funding Details

Masterworks recently announced the completion of a $110 million Series A funding round, valuing the company at over $1 billion. The investment was spearheaded by Left Lane Capital, a venture fund based in New York City. Additional participation came from Galaxy Interactive and Tru Arrow Partners.

The Growing Appeal of Alternative Assets

Alternative assets have experienced significant growth in recent years. This is largely due to heightened volatility and inflated valuations in public markets, prompting investors to pursue higher returns in non-traditional areas.

The alternative asset landscape is diverse, encompassing collectibles like vintage video games, trading cards, sneakers, and non-fungible tokens (NFTs). However, fine art represents a more established segment, offering a comparatively stable risk-reward profile.

Predictability in Art Returns

“Unlike speculative assets, art provides a degree of return predictability,” explains CEO Scott Lynn in an interview with TechCrunch. “While substantial gains like a 10x return are unlikely, significant losses – such as a 90% decline – are also improbable.”

Focus on Established Artists

Masterworks concentrates its investments on artists with a well-established market presence and demonstrated value. Lynn emphasizes that the company focuses on paintings valued at $1 million or more, prioritizing predictable returns.

How Masterworks Operates

Masterworks acquires and securely stores artwork from renowned contemporary artists, including Andy Warhol, Keith Haring, Jean-Michel Basquiat, and Yayoi Kusama.

Shares in these artworks are then offered to the public through qualified offerings registered with the SEC. This allows investors to trade shares on a secondary market after the initial offering closes.

Shareholders receive payouts when Masterworks sells a painting. The company generates revenue by selling artwork at a profit, taking a 20% share of the profit and a 1.5% annual management fee for each piece.

Investor Profile

Masterworks continues to attract investors with substantial capital. The average investor allocates over $5,000 per painting and approximately $30,000 over their investment lifetime.

• Key takeaway: Masterworks provides access to an asset class traditionally reserved for high-net-worth individuals.
• Investment strategy: Focus on established artists with proven market value.