Last week, we wrote about a startup called Paddle8, which raised $4 million from Founder Collective in an attempt to marry an “online destination for both beginner and veteran collectors to access fine art works” with a transaction platform that looks to automate (from top to bottom) the purchase, sale, and shipping of fine art.
Albeit niche, it is an interesting play, for the very reason that, while there has been growing interest among investors and entrepreneurs in luxury brands and disruptive ideas targeting this niche, lucrative market, the fine art space has remained largely outside of the reach of technological innovation and disruption.
As the art world and the market for fine art and collectible items have becoming increasingly international, one would think digital platforms and technology would help speed their growth, open up new markets, and make transactions more seamless. After all, eBay was founded in the mid-90’s. When one looks to the international scene to find the prime movers of tech-based platforms, one of the names that surfaces is Saffronart.
Saffronart was founded in 2000, taking a page from eBay’s book, as an online auction house — yet one that specializes in modern and contemporary Indian art. Almost immediately, the company found an audience, quickly selling $125K worth of fine art. Despite some bumps along the way (the global financial crisis in 2008 wreaked havoc on the art market), Saffronart has grown to be the largest fine-art auction house in India, online or otherwise, and one of the largest online fine art auction platforms in the world.
Its model has been successful enough to make it recently became the subject of a Harvard Business School case study and prompted art auction giants Sotheby’s and Christie’s to jump into the Asian market.
Since “officially” launching in 2001, Saffronart has come to deal not only in fine art, but jewelry, watches, collectibles, and even homes. The online auction house has played a role in some of the largest online art auction sales, as COO Nish Bhutani tells us that it (by all accounts I could verify) set the global record for highest value for a single piece of artwork auctioned on the Web — a $2.2 million canvas in 2010, and one of the highest auction bids placed via a mobile app ($1 million in 2011), along with a $235K purchase via the company’s mobile app in 2010.
For Saffronart’s main auction events, which are 2-day auctions offering 100 or so works on sale, the average per-transaction value of artworks is between $40K and $100K. And, as indicated in the prior statistics, a big part of the company’s success has been that its auction platform includes both a web experience as well as for mobile devices, as it offers apps for iPhone, BlackBerry, and iPad. Saffronart re-launched its iPad app a few days ago. (Auctions are held entirely on the Web, too, in case there’s any confusion there.)
Back in 2007, seeing some good early traction, Saffronart raised $12 million from Sequoia and Baer Capital, which the COO said was instrumental in allowing it to survive the financial downturn. Part of Saffronart’s appeal to investors was the alternative it was provided to physical auction houses through place-shifting — in other words, as the art market becomes more global and as buyers pop up across the world, success in the market requires businesses to cater to all locations by way of live bidding from mobile devices, etc.
What’s more, although its auctions are 24 or 48 hour events, Saffronart thinks it provides an advantage to bidders located in different time zones, who get to experience the convenience of being able to log in and bid over an extended period of time, versus the traditional 3-hour timeframe of physical auctions.
Being on the Web also benefits users in that they can find out more about Saffronart itself as well as objects being sold, view catalogs, register to bid, etc. There’s that and the ability to offer a higher level of transparency than physical action houses, including comparable prices, additional charges (commissions, shipping, etc.), and dynamic updating based on current bid values, shipping destinations, and all that good stuff.
Offering digital service also allows Saffronart to be more nimble, enabling them to experiment and move quickly. For example, in the past few months, the startup has increased the number of auctions they offer as well as new selling mechanisms, like “absolute auctions,” which have no reserve prices and bidding starts at $100, even for artworks worth tens of thousands of dollars.
Which brings us to the announcement the company is making today. Saffronart has been, up to this point, solely focused on the sale of Indian fine art, watches, and other luxury items. While it has become the largest online auction platform for fine art in India, 40 percent of sales come from outside India. Of course, the majority of that 40 percent is driven by Indians living overseas.
Saffronart has had offices in New York and London for years now, and plenty of international buyers, but the company has never offered Western art in its auctions. Today, the company announced its entry into Western art with an inaugural auction of impressionist and modern art pieces — a first for India. The auction offers works from Van Gogh, Picasso, Matisse, and more in a total of 73 lots and includes paintings, drawings, and sculptures.
Western art obviously represents a big strategic push for Saffron to further expand its reach into international markets, and Bhutani says that the company plans to ramp up these kinds of Western art auctions in the near future.
For those interested in checking out Saffronart’s live auction summary, you can see it here, and the auction catalog is here. (Although it should be noted that Saffronart requires its bidders to apply for approval in order to make bids, although everyone is welcome to apply. Generally, this means that Saffron checks out a combination of bank references, credit checks, etc.)