Love is in the Air

Big Banksy

In 2018, Banksy’s Love is in the Bin went to auction.

Well, actually, his classic 2006 Girl with Balloon piece went to auction in Sotheby’s London. The final bid was $1.3M, and just as the painting sold, the hammer came down and the painting automatically shredded. A new artwork emerged in real time, and Love is in the Bin was born.

The publicity stunt worked to say the least.

$1.3M was the second highest price by a Banksy work on the secondary market.

After the self-shredding fiasco, Banksy’s popularity surged quite visibly. Collectors searching for Banksy art increased by ~180% during the same month.

When Love is in the Bin came back to market in 2021, it re-sold for $25.3M, a new auction record for the incognito artist.

$25.3M is 19.4X the previous purchase price of $1.3M - more than a modest return for any asset class.

Let’s explore the area where contemporary art and institutional investing intermix.

The Art of Investing

Contemporary art has outperformed the S&P 500 at a compound annual growth rate of 12.6% between 1955 and 2022. Online platforms and digital art are now complementing the expansion of art as an alternative asset.

Companies like Masterworks and Yieldstreet are at the forefront of providing access to art funds:

• Masterworks allows investors to own shares in blue-chip artworks that are typically inaccessible. Founded in 2017, Masterworks acquires iconic contemporary masterpieces through a rigorous selection process by renowned artists like Picasso, Basquiat, and Warhol, and then offers fractional ownership to investors through a proprietary platform. The company raised $110M in Series A funding at a $1B+ valuation, in a round led by Left Lane Capital.

• Yieldstreet offers art as one of its many alternative investment opportunities. The platform has successfully funded over $400 million in fine art investments, delivering an impressive 12.2% net annualized return. Yield Street’s latest Art Equity Fund V owns a diversified portfolio of 8 works by mid-career artists, including pieces by Jacob Lawrence and Jack Whitten, with a target annualized net return of 15-20%. The company has raised a total of $278.5M in venture capital, with a $100M Series C round in 2021.

Rich off Auctions

Christie’s, the prominent New York auction house, launched Christie’s Ventures in July 2022, pioneering investment specifically focused on the intersection of art and technology. Christie’s Ventures concentrates on four categories:

• Web3

• AI

• FinTech

• Hardware

Portfolio highlights:

• Art Money: A global fin-tech platform offering specialized art financial services to empower artists and foster a sustainable creative economy. Christies’ Ventures acquired a non-control minority stake in February 2023. Coming off of a recent partnership with Art Money, Christie’s will soon debut “buy now, pay later” loans. 

• Atomic Form: A full-stack digital art and NFT platform founded in 2021. The company provides solutions tailored for digital creators, collectors, and curators, including top-tier NFT displays for galleries and innovative software. Atomic Form raised $4.5M in its first seed round in January 2022. 

• Conserv: A wireless environmental monitoring platform changing the art conversation market. Its database is for collections care, used by museums, libraries, and private collections. Christie’s Ventures added Conserv to its portfolio earlier in April; Conserv previously raised $4M in funding over three rounds, last ending in May 2022.

Dive Deeper

• Financial Times inside scoop on Banksy and the art market. Read it here

• Detailed story from ARTnews on Masterworks operations. Read it here

• Bloomberg video of Devang Thakkar, Christie’s Ventures global head, giving an overview of their tenth investment. Watch it here

Headlines

• a16z closes $7.2B for its new fund, exceeding the $6.9B target. Read the Axios article here

• Goldman Sachs posts its highest earnings per share since 2021. Read the Reuters article here

• USA Basketball has finalized the 2024 Paris Olympics Roster. Read the Hypebeast article here

• The amount of family offices has tripled since 2019. Read the CNBC article here