There are two types of people in this world: those who dream of buying an original Picasso, and those who have their butler do it. So astronomical are the sums regularly switching hands for fine art, investing in the work of a great master is a pipe dream for most of us. But perhaps not for much longer. At least not when Maecenas enters the fray. Having raised over £200,000 via venture capitalists, this online marketplace is about to bring together private collectors, artists and investors to buy shares in singular artworks, processing transactions through Blockchain, the same secure database technology behind Bitcoin. And the smart money is on it causing some serious ripples in the art market. Miguel Neumann, 37, an Argentine-born investment banker who once toyed with the idea of being a painter himself, is one of its co-founders. RISING asks him why his new venture may just spark a revolution...
RISING You refer to yourselves as a ‘decentralised art gallery’ – what do you think stands Maecenas apart?
MIGUEL NEUMANN ‘The closest thing to what we are doing are art funds, which build a portfolio and offer partial ownership, like raising half a billion dollars and then offering units of that, like a hedge fund. But what we’re bringing is the ability to invest in pieces instead of a portfolio; so if an owner of an artwork needs cash for other ventures, such as for restoration of the piece, which can be extremely expensive, we can help offer up to 50% of the ownership of the art piece via the platform, meaning they raise cash through their collection without having to sell it. That’s a unique feature that collectors have found very appealing in us. We’re not competing with the galleries, collectors or artists either.’
RISING Are there any parallels between investing in the classic art market and investing in property?
MN ‘Absolutely. Classical art won’t grow as aggressively in price as we’ve seen in the London housing market, but it’s safe and will only grow. It’s premium – how many Michelangelo paintings are there in the world? It’s not like he’s coming back from the dead anytime soon.’
‘It’s no longer about old money, it’s about new money.’
RISING Are you hoping to spawn a new breed of art investor with this?
MN ‘That’s the hope. Art ownership has for a long time had the reputation of being only for the privileged few, but even these long-time art owners are wanting a change. Many of these owners are asset rich and cash poor, and there’s a younger consumer emerging. It’s no longer about old money, it’s about new money.’
RISING So if we’re not talking millions, how much, realistically speaking, will someone need to stake a claim with your platform?
MN ‘Right now, the minimum buy-in is £100k. The short answer for this is that there are restrictions within what the financial regulators in the EU and UK allow for ordinary people to invest in, without experience in finance – it’s done to protect people from taking risks they may not fully understand – but our people are hoping to eventually lower the buy-in to as little as £5k.’
RISING How confident are you that your business plan will work? £100k still isn’t cheap.
MN ‘There’s always a risk, as there is with investing in art itself, but the beauty of working with established names is there’s always a thirst for it. You’ll always find someone who wants to invest 10% in an Andy Warhol piece. That’s not to say we won’t feature emerging artists, but because so many come and then go with a whimper, we’ll start off dealing chiefly with experienced collectors and established names.’
RISING And if it is a huge success, what’s phase two?
MN ‘We’re also looking to test the same concepts with galleries, where we offer a financial product based on capital growth, not too dissimilar from a bond. If you tried to do something like that through a bank today it would be almost impossible – the rate and interest are incredible, never mind the insurance.’
‘Only invest what you can afford to lose – that’s the key – if you overexpose yourself it’s a recipe for trouble’
RISING What about the people who don’t have £100k right now?
MN ‘Start developing a taste for pieces you like. Go to exhibitions of young artists to get ahead of the curve. When the University of the Arts or the Royal College of Art have end-of-year shows, established gallery owners have been known to send scouts down and buy pieces from emerging talent, then aggressively push these same artists in their own galleries – so, if you go to these shows and keep abreast of who’s buying what, then you have a chance of finding an untapped market or trend. The price may boost sooner than you think.’
RISING And what trends have you seen of late?
MN ‘We have seen some growth, particularly for corporate collections, in the Indian market, which seems to be very active. South American paintings are also on trend. That could be an interesting angle for someone looking for a risk opportunity over a safe and sound asset, which will cost more.’
RISING What’s the best mindset when getting into art investment?
MN ‘Even if you find a piece that you ultimately discover isn’t worth anything, if you like it you’ll be happy supporting the culture and contributing to something you like. And only invest what you can afford to lose – that’s the key. If you overexpose yourself that’s a recipe for trouble.’
WHAT NEXT ‘Start looking for originals, little pieces, more than a reproduction,’ suggests Neumann. ‘Not so long ago, Jean-Michel Basquiat was paying for cigarettes by making a squiggle on a piece of paper, and now those squiggles are worth hundreds of thousands. You never know who may crack it big.’