The companys first acquisition was Andy Warhols 1979 painting 1 Colored Marilyn (Reversal Series), for a purchase price of $1.82 million. Then there are art dealers, who are a step removed from the artworktheir job is to flip itbut in this process, the art is often put on display for the general public. Masterworks charges a fee to the shareholders to store and insure the art it owns. But todays options for valued art and collectibles have exploded, particularly with the rise of blockchain and non-fungible tokens (NFTs). Thats what Ive found. You wont owe anything for buying the shares initially or for selling them to another investor on the secondary market. In addition, he makes $1,395,440 as Executive Vice President, General Counsel, and Secretary at Ryman Hospitality Properties Inc. Scott has made over 32 trades of the Ryman Hospitality Properties Inc stock since 2013, according to the Form 4 filled with the SEC. Its more novelty, theyre not investors per se, more car aficionados. Non-U.S. is not a huge market for us, less than 10 to 15 percent of the whole market. This feature is only available to U.S. citizens with U.S. Synapse bank accounts. Related 00:00:00 00:57:51. 192: Buy Shares of High End Art with Masterworks CEO Scott Lynn Perhaps most similar to Masterworks is buying and selling NFTs on primary and secondary marketplaces. Masterworks uses algorithms and data analysis to determine which art pieces to invest in and manage in its portfolio. In this detailed Masterworks review, well walk you through what this art investing platform offers, how to get started, its features, annual returns, and much more. You do not have the option to pay the fee in cash. Each offering amount is tethered to the original cost. Individual investors are limited to owning no more than 10% of an individual work of art. See Scott Lynn's compensation, career history, education, & memberships. Charles Schwab, Fidelity Investments and robo-advisor Betterment each offer traditional and Roth IRAs that help you maximize your retirement savings. You dont have to be an accredited investor or high net worth individual to use their services. SL: It depends on the painting but the minimum range is between $1,000 and $10,000, so starting at 50 shares. Mr. Lynn is a graduate of the Vanderbilt University School of Law and Tennessee Technological University. During your artworks appreciation phase, it will be displayed in a gallery in the famed art district of SoHo, New York. After purchasing a piece of contemporary art, Masterworks registers it with the Securities and Exchange Commission (SEC) to enable it to sell fractional shares in the work to investors via its platform. Business Details Location of This Business The interview is not a way to reject some applications; on the contrary, it provides a way for Masterworks to get to know you better, answer your questions and recommend investments. For investors who have a strong interest in contemporary art, this might not be a major disadvantage. Members-only fine art gallery in New York. It generates revenue every time a piece of art is sold on its platform through a primary offering or secondary market sales. Keep in mind, however, past performance does not guarantee future success. Twenty percent of the profits from selling a work of art on the open market after three to ten years goes to Masterworks to run the business, make a tidy profit, pay storage, conduct appraisals, and pay insurance on these valuable works of art. Its interesting to see how people choose which painting to invest in. Theres also some speculation on Twitter and other social media threads that the historical data for fine arts ROI are just too good to be true. Whats the smallest quantity of shares someones bought, and the greatest? Your financial situation is unique and the products and services we review may not be right for your circumstances. Not only would you need to pay the entire price of a work of art upfront, you would also need the ability to pay for ongoing costs of storage and insurance. The corporates main mission is to democratize entry to the profitable world of blue-chip artwork, which has historically been reserved for ultra-high-net-worth people and elite collectors. Blocking categories may impact your experience on the website. Anyone whos ready to venture into alternative investing and has a medium time horizon will love Masterworks, even though the fees are a little wonky and the concept of blue-chip art for all is still new. With Hirst, people have lost money 57.1 percent of the time. Masterworks makes money by selling fractional shares in investment art to investors, charging a commission on eventual sales, and charging storage and insurance fees. Masterworks Obviously, wealth taxes are one logical answer. Related In 2014, Scott founded Payability, a digital lending provider. 3. Its easy to understand and get excited about. The platform is ideal for investors who want to benefit from art investments without having to drop a ton of dough on expensive paintings. Thats my best explanation, but it doesnt make sense. Single women own more homes than single men but get lower returns here are 5 tips to change that. Over lunch near their office in downtown Manhattan, Lynn and his CFO Nigel Glenday talked about why theyre confident their company will grow, what their greatest challenges are and why theyre steering clear of art world darlings Damien Hirst and Jeff Koons. Web#387 Scott Lynn, Founder & CEO at Masterworks.io - Democratizing Investments in Fine Art Today were talking to Scott Lynn, the Founder of Masterworks. So the core part of our strategy for the past year and a half has been to build out a trading platform that allows people to trade securities in these paintings. Determined to monetize what he says has been a shockingly overlooked piece of the $68 billion global art market, startup veteran Scott Lynn founded Masterworks in 2017 to make investing in blue chip art accessible. Masterworks: How It Works and What To Know Before Investing There are no fine art exchange-traded funds (ETFs) or mutual funds available. The largest trade he's ever made was exercising 8,520 units of Ryman Hospitality Properties Inc stock on 15 March 2019 worth over $763,903. Regulatory risk: The art investment market is heavily regulated, and Masterworks must comply with these regulations to remain operational. Investing in art involves unusual risks, however. Masterworks also provides articles and videos teaching people about art investing. Some of them may lie unsold for years. 1201 N. Orange Street Suite 7160, Wilmington, DE 19801, United States. Masterworks However, providers can change any aspect of a product at their discretion and may not notify us of a change. Conversely,people have made money 95 percent of the time with Jean-Michel Basquiat. You have all these opportunities for liquidity in the market. Now 38 years old, Lynn started collecting modern art when he was only 19. Once weve secured the painting, theres the immediate question of how its performing for people who would otherwise just assume they could never invest in it. In private equities, theres 9,000 different venture capital and private equity firms; gold, theres lots of different ETFs and ways to invest, says Lynn. Theres a lot of demand across the board to invest in art. Masterworks' $5.5 million Basquiat painting entitled "The Mosque." The platform stands out especially for using propriety data to determine which artist markets have the most momentum, focusing on the very high-end segment of the art market that has predictable returns, the company says. Want must read news straight to your inbox? But at the end of the day, you need to decide which works are the best fit for you. This storage is often necessary for the basic functionality of the website. Masterworks Founded by Scott Lynn in 2017, Masterworks makes blue chip art more accessible, whereas before its only ever been available to elite investors and collectors through art auctions or expensive brokers. That painting could theoretically sell much sooner than we expected. Today is no exception. Using its own capital, Masterworks sources works of art from all around the globe, aggregating pieces from collectors, advisors, galleries and dealers. Whats less clear to me is exactly what financial products well offer: single painting vehicles, funds. Our best day so far. Terms & Privacy Masterworks claims that its proprietary pricing database contains more than 70 years of data and 60,000 data points which help collectors value pieces and project returns. If youre looking to diversify your portfolio by investing in artwork without spending a fortune, Masterworks offers a compelling platform. And, a recent sale on the Masterworks platform returned 32% to investors in under 12 months. Please try again later. Scott: Yeah, its a $1.5 trillion asset class, roughly $60 billion in art sales every year. The process is simple and takes care of all the necessary forms to start investing. That painting is currently valued at closer to $8.5 million. For example, Masterworks already includes Andy Warhols1 Colored Marilyn (Reversal Series), which waspurchased in November 2017 for $1,815,000andMonets Coup de Vent (1881) purchased in June 2018 for approximately $6.3 million. Conversely, if something negative happens to that same population globally, our prices could go down. Whats the average investment? Masterworks is an investing platform that for the first time ever, investors can purchase and trade shares in multi-million dollar works of art by artists like Picasso, Monet, and Warhol. At Finty we want to help you make informed financial decisions. Scott Lynn: We were the first company to buy a painting, file with the SEC and sell shares in the painting. This gives you the opportunity to talk about your goals and risk tolerance, after which the specialists help you pick appropriate pieces of art for your investment. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Its a much different risk profile. WebScott Lynn. Finty does not list every product currently available in the market. To give you some context, lets take a look at the historical performance of art and the Masterworks platform. And since it was only founded in 2017, theres insufficient historical data to evaluate its longevity and performance. That said, Masterworks experts vet the quality of each piece and they only list those that they think have good investment potential. Now 38 years old, Lynn started collecting modern art when he was only 19. Were starting the education process about the asset class. In addition to Masterworks, Mr. Lynn serves on the board of v2 ventures (Adparlor, Giant Media, Reachmobi, Amply, and Sellozo), Payability, and the Brooklyn Rail (a non-profit publication in the art industry). In art, theres really no way to invest other than to buy a painting.. | We expect our first offering for the Andy Warhol 1 Colored Marilyn (Reversal Series) to be qualified by the Securities and Exchange Commission shortly, Lynn said. Tell me about that. In October 2021, Masterworks raised $110 million in series A venture capital funding, at a total valuation just above $1 billion. From a regulatory perspective, we have to buy the painting before we file with the SEC, so it all goes on the balance sheet. With a minimum required investment of $10,000, regular investors wont need millions to buy valuable contemporary art on Masterworks. Shares are sold at $20 and an initial investment of $3,000-$5,000 is recommended to get started. The first is very established, mid-career living artists that have mid-teen to 20-plus returns and we define them as having moderate risk, which is the specific risk grading that we use in the SEC filings. Its also not ideal for investors who need liquidity. Scott Lynn is the Founder and CEO of Masterworks.io. Registering each work of art with the SEC makes them qualified investments, allowing Masterworks to accept retail investors and accredited investors. Shares of the painting are then made available for purchase on the Masterworks website for as little as $20 per share. Want to Invest in a Banksy Painting? Masterworks Makes It Easy Its not how you would typically think about running a start-up, where you move fast, break things, figure things out, just keep iterating. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive compensation from the companies that advertise on the Forbes Advisor site. Information provided on Forbes Advisor is for educational purposes only. We'd love to hear from you, please enter your comments. Scott Lynn, CEO at Masterworks Biography - rblt.com