We all have our opinions about art (even if that opinion is just I don’t get it) — but what about art as an investment?
Arthena, which is part of the current batch of startups at Y Combinator, says it can help investors make money reliably from art. Founder and CEO Madelaine D’Angelo said Arthena first launched as an equity crowdfunding platform for purchasing art. More recently, it’s added financial tools to create “accommodate that quantitative strategy for the art market.”
Specifically, Arthena looks at factors like a work’s artist, their career and the year of creation, then combines that with analysis of art auction results to predict a piece’s likely risk and return on investment. This analysis allows investors to put money into different Arthena funds based on their risk tolerance.
D’Angelo said Arthena built these tools out of necessity, because wealth managers and other big investors were interested in participating — but first, Arthena needed to provide “the same level of analysis as hedge funds.”
D’Angelo acknowledged that the art world might be skeptical of Arthena’s numbers-based approach, but she said the company will always have “a human in the loop to help finalize these decisions.” She also said that her goal isn’t to cheapen the work of art buyers or artists, but rather to “add volume to the market.”
“Collecting and investing are two completely separate activities,” she said. “It’s very hard to separate that emotional aspect. When you’re looking at it from a non-mathematically-driven point of view, you can miss really great opportunities in market. Or you might overpay for something that you’re attached to.”
Why invest in art at all? D’Angelo said the art market is appealing because it offers impressive returns without being too tied to the ups and downs of the stock market.
Arthena says it can double the art market’s standard annual return of 10 percent. And there definitely seems to be interest on the investor side — since the company switched to its current approach a few months ago, it’s received $20 million in commitments.
D’Angelo also said that while the teams at other art startups usually come from “just the art world or just the tech world,” Arthena combines both, with D’Angelo’s experience in art and her CTO/brother Michael D’Angelo’s data science background, making them “uniquely qualified to solve this problem.”