Aussie art financier shakes up global industry
Paul Becker is introducing fintech to a conservative art world in a bid to help more people buy and sell art.
Paul Becker made his first foray into the art world in the nineties, when he won a publishing contract for the magazine of the Art Gallery of New South Wales. His company published the magazine for 15 years, during which time he became increasingly drawn to other business dealings in the arts.
When he organized a not-for-profit art festival, it dawned on him that the industry was ripe for disruption.
“While trying to raise money from sponsors like the government and banks, I realised that the art industry was always putting its hand out,” he says. “It is deserving and important, but that donation mentality is not sustainable. It was a broken and inefficient marketplace.”
One of the difficulties for artists he observed was the delay in receiving full payment for a piece of work. It could come months after the initial deposit.
Many potential buyers were hampered by cash flow issues and bought fewer pieces than they wished to. In theory, a personal loan could be obtained but the reality was that doing so was virtually unheard of.
“Banks don’t understand the passion purchase,” he says.
Becker founded fintech Art Money in 2015 with the aim of making it easier to buy and sell art, thereby creating a ‘sustainable creative economy’. Art Money enables a buyer to pay for an artwork in ten interest-free monthly installments.
They take the artwork home on the spot and Art Money pays the gallery in full, immediately. The gallery pays a 10% commission to Art Money.
“Yes – we’re paying before we get paid,” says Becker.
“We effectively borrow the money. We have a debt facility that is backed by the receivables, some of whom have a high net worth. We have a very solid client base with high credit scores, and it is short-term financing with a less than 1% default rate. Generally, the debt guys are pretty happy to give us money.”
A psychological enabler
Art Money has partnered with 1900+ art galleries around the world and it has been used by over 7,600 collectors to buy more than 18,000 artworks. Becker dislikes comparisons with the popular buy-now-pay-later model.
“Broadly speaking, 25% of income for buy-now-pay-later models comes from late fees,” he says. “We make 0% from late fees.”
Art Money’s biggest customer groups are professionals with high disposable incomes: doctors, lawyers, accountants and bankers.
“Art Money is about psychology, not affordability,” he says. “Most of our clients actually have the money. However, art is a discretionary purchase, and most people want to buy it in a responsible way. They’re using Art Money as a psychological enabler.”
In June, Art Money released a new product that enables a buyer to make a purchase from any art seller in the world, rather than being restricted to its 1800 partner galleries.
The highest transaction facilitated by Art Money was $600,000. In Australia, the average transaction is $5000, in the US it is USD$10,000 ($15,000) and in the UK it is GBP15,000 ($28,500). Becker says the different averages reflects the maturity of each art market.
Becker relocated to London from Sydney last year and travels frequently to New York.
“I’m here because this is a global business and to grow a global business, you need to be where all the action is in the art world,” he says. “Australia is just 1% of the art market. The United States has a 45% share and the UK is 20%.”
Old school obstacles
Becker’s biggest challenge to date has been overcoming the industry’s conservatism, including low rates of tech adoption and a distaste for discussing pecuniary matters.
“Talking about money is frowned upon,” he says.
“If you’re buying art, you should be wealthy, right? The art world is also messy and fractured. There are lots of small players and it’s very global. I can’t think of another industry that doesn’t have finance as part of its default package. This is the first time anyone has tried to solve the problem in a $100 billion global industry.”
Art Money has 135 investors – an unusually high number. In Australia, the investors mostly comprise angel investors and family offices, along with just a couple of venture capital firms.
“If you don’t understand the art world, you’re not going to invest in our business.”
In February, Christie’s auction house made an equity investment through Christie’s Ventures in Art Money that gave it a non-control minority stake.
“That’s validation of our business model from the largest player in the industry,” says Becker.
Christie’s Ventures was launched less than a year ago as part of its decision to pursue financial innovation at the 250-year-old auction house. Art Money was its fifth investment. Christie’s will offer Art Money on its platform and to their clients, with specifics of the commercial partnership to be detailed by the end of the year.
“In the UK and US alone, that’s a $1 billion US per annum opportunity. The power of Christie’s buyers is going to be a game changer,” says Becker.
Becker believes that Art Money is well on track to change the art industry on a global scale. There is also the potential to expand into other collectibles down the track – perhaps leading with an offer to Christie’s clients.
“We want to be a billion-dollar business within five years,” says Becker. “We can achieve that if we are across just 4% of the art market. I know that we can do it.”
Written by Jessica Mudditt