Maecenas – Democratising Fine Art Investment

Maecenas Fintech Asia Marcelo García Casil

A new global marketplace that lets investors buy and sell shares of masterpieces.


By Marcelo García Casil ( https://www.linkedin.com/in/mcasil/ ), Chief Executive Officer of Maecenas

 

Fine art has been for centuries a great store of value for wealthy families. However, it is a market that leaves most investors underserved due to the many barriers that exist to enter this market.

Most first-time investors who get excited about purchasing their first piece of art very quickly get discouraged and disappointed as soon as they learn about the tedious and opaque process required, and the huge fees that dealers charge.

But it does not have to be this way. Technology has created efficiency in capital markets for the benefit of many asset classes, and there is no reason why fine art should be the exception. One of the key challenges faced by the art market is validating the authenticity of artworks. Now, with blockchain technology, this process can be made secure and tamper-proof to unlock the estimated trillions of dollars’ worth of fine art currently in safe storage.


Art is fascinating and many develop a strong passion for it. My mission as founder of Maecenas is to allow everybody to enjoy art and add to their collection pieces of famous artists who are currently only available only to the very wealthy. For this reason, I created Maecenas, the world’s first decentralised art gallery that democratises access to fine art investment. Maecenas — named after a Roman patron of the arts — uses blockchain technology so that investors can invest and transact securely in art without having to worry about the cumbersome processes that are currently the norm. Enabling fractional ownership of artworks also means that anyone could own artworks by blue-chip artists with a small investment. Who wouldn’t want to have a Picasso or a Monet in their collection?

 

The efficiency of our platform also results in lower processing costs, which we pass down to our clients, who pay only 2% in fees. Compare that to the current state of affairs. Auction houses charge fees up to 25% in opaque procedures where transactions can take weeks to settle. Many private transactions involve a middleman and the identities of the buyer and seller can remain concealed for years, making it difficult to even find out the price. There is no reliable database detailing the provenance of works of art, so uncovering information that is taken for granted in many other markets can be a very time-consuming task.

 

Several surveys and research papers confirm that there is strong evidence that institutional investors, family offices, High Net Worth individuals and asset management companies are genuinely interested in the fine art market, but ultimately can’t see how they would secure a return on their capital. Managing risk in a non-liquid and opaque market is a challenge they struggle to overcome.

Maecenas will soon hold a token crowdsale to raise funds to launch the platform, it will be on September 7th to be exact. Our crowdsale is endorsed by cofound.it who are the leaders in this space ( https://cofound.it/en/projects/maecenas/ ). The impact on the fine art market will be transformational for both investors and collectors. Investors will have access to very high-quality art without experiencing all the complications they currently have to deal with: due diligence will be done for them, which guarantees that the art is authentic, in good condition and stored safely. The investment will be transparent, with regular benchmarking to compare its performance against other sectors of the market. All transactions will be securely stored in tamper-proof digital ledgers.

But Maecenas is not just for investors. Private collectors, museums and galleries are being given a new way to raise finance from their assets without selling them. This is currently very difficult because banks are reluctant to lend against them. There is a huge market here, particularly amongst owners who need money quickly but don’t want to sell in a hurry; typically, it would take at least six months to sell a Matisse through an auction house, plus another 40 days after the auction for the funds to be received.

We will list artworks of various kinds, ranging from $500,000 and up to several million. We will mainly focus on Fine Art (paintings, sculptures, drawings) from the period 1840-1990. As for artists’ names, works by Rubens, Goya, Picasso, Pissarro, Braque, Chu Teh Chun, etc. already have been proposed to us.

And of course we will ensure this high-value artwork is kept safe. Generally, insurance companies, such as Lloyds or AXA Art, judge whether a location is both secure for an artwork and maintains the appropriate conditions. This allows the art owner (private collector, gallery, museum) to keep the artwork where it is and continue to enjoy it, or exhibit it, showing it to clients, etc.

Maecenas will also only accept authenticated works. As part of our due diligence, we arrange for provenance checks to be conducted by reputable and trusted third-parties, including art loss registry checks and physical inspection of the property. The documents produced during the due diligence process are stored securely and are cryptographically timestamped on the blockchain to ensure that they are impossible to falsify once they’re on the platform.

Maecenas investors will be able to trust valuations of the artworks, too.  Prior to the listing of the artwork, we will ask the art owner to provide Maecenas with a recent, credible auction estimate which will be double checked and documented by us. The fair market value of each listed artwork will be assessed and, if needed, modified, by us, as part of a quarterly report on each listed artwork.

For a long time, the prices of Old Masters have remained stable, offering little opportunity for a return on investment. However, recently that trend has shifted and the Old Masters are back in favour with big collectors. Peter Paul Rubens’ Lot and his Daughters was sold by Christie’s London for £40m, the second most expensive work ever to sell by the artist. At Christie’s Old Masters auction in New York last April, an old man at a casement by the seventeenth century Dutch artist Govaert Fink sold for $10.3m, more than double the price when it was sold by Christie’s in London in 2011.

A global and open investment platform connecting art owners and investors has never existed before. We truly believe that we can democratise the art market, bringing a new generation of investors into art and creating new opportunities for owners.

The fine art market is massive — $65 billion traded annually and about $3 trillion of value in storage. It deserves to be modernised. It deserves Maecenas.

 

 

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