Posted on 14th January, 2015
Posted on 14th January, 2015
by James Codling
What does any of this have to do with crowdfunding?
Silly season in the art market is nearly upon us. For two weeks in mid-February the global art world will descend upon London to celebrate the best in Impressionist, Modern, Post-War and Contemporary art.
It will culminate with the Evening Sales at both Christie’s and Sotheby’s, the two auction houses that dominate the high end of the art auction market.
Undoubtedly tension will be high, records will be broken and a number of extremely wealthy individuals and collectors will leave on the night with some of the best artwork the world has to offer in their possession. It is a spectacle that is fascinating to observe and even more fascinating to be a part of. Months, years, maybe even decades of hard work by the specialists who follow the art culminate in a bidding frenzy lasting only a couple of hours. Under the watchful eye of the auctioneers, dreams can be made, or shattered, in a matter of minutes.
Whilst in the formative stages of VentureFounders, I had the privilege of being a part of the Impressionist & Modern department at Christie’s, dealing with artists such as Monet, Dali, Picasso and Kandinsky. It was a unique environment to work in and one that I still miss.
What does any of this have to do with crowdfunding you may ask? Irrespective of the fact that the actual auction is similar in many ways to the process of a crowdfunding campaign, understanding how this world works helped define and shape many of the principals that we adhere to at VentureFounders.
The leading art houses dedicate huge amounts of time and resource to sourcing the best artwork to showcase in their auctions. Success is dependant on understanding market behaviour and buyer trends. In addition, their ability to reinvent, stay at the cutting edge of the industry and build long term relationships that may only yield results many years after initial contact, has helped to maintain positions as leaders in the industry.
So it is in our world where exactly the same principals apply and hopefully will define our success in years to come. We look to source the best and most attractive investment opportunities, ones that we believe will appeal to investors on our platform even if that means working with those businesses and their owners for a long time before they come to market.
Another core skill in the art world is around the due diligence process. Specialists are skilled negotiators that understanding the true market value of a piece and can advise their clients accordingly. With meticulous attention to detail, they undertake rigorous and detailed due diligence to verify the provenance of the work (to verify its authenticity) before it can be put forward for sale at auction.
These principals form the core of our beliefs at VentureFounders. We ensure that all opportunities we put forward have been appropriately structured and diligenced, importantly at the right valuation point, so that investors can invest with confidence.
Christie's and Sotheby’s are relationship-focussed businesses. They live or die on the long-term relationships developed with both buyers and sellers. Understanding the complex relationship between those that own art and those that want to buy is key to delivering a successful auction with a high numbers of lots sold at or, ideally, above the asking price.
Much like crowdfunding, having momentum in an auction with buyers and sellers matched up before entering the room drives the end result. At VentureFounders we apply these same principals. Building those relationships and having a deep understanding of our investor base and their requirements enables us to present them with the right opportunities and get them committed to a transaction early in its campaign.
I often talk about how crowdfunding needs to become more professional. The sector needs to adopt many of the skills that have helped make much of the finance industry successful.
Reflecting on the upcoming excitement in the art world made me realise that these are important core skills. Skills that have defined success in many other industries as well.