The market for buying, selling and learning about visual art online is getting a significant boost today. Artsy, the New York startup that has positioned itself as the go-to place for all things arty — a platform for people to learn about visual art online as well as explore opportunities to buy and sell work — has raised $50 million in funding.
The company is not disclosing its valuation but deal intelligence service Pitchbook notes that it is $275 million post-money (and $225 million pre-money).
Carter Cleveland, Artsy’s co-founder and CEO, said in an interview that the plan is to use the investment to dive deeper into auctions, which today are the fastest-growing part of the site after the company secured partnerships with Christie’s, Sotheby’s and Phillips, the three leading brick-and-mortar auction houses.
Cleveland said Artsy has seen auctions quadruple in number on the platform in the last year, and now Artsy accounts for one-third of all received bids for auctions it hosts, and nine percent of all sales.
Meanwhile, Artsy’s current business mainstay — developing and hosting sites for 1,800 commercial galleries in 90 countries, and selling their work online — has helped contribute to $20 million of sales each month from a user base of 2 million unique visitors per month (who also visit it for its content, which includes an in-house magazine and other informational content).
The Series D, which brings the total raised by Artsy to around $100 million, was led by Avenir Growth Capital, a new firm out of New York, and includes a very long list of investors — 56, according to the Form D we spotted.
Some of the most prominent are worth noting. They include investment firm L Catterton, Thrive Capital, Shumway Capital, the art dealer Larry Gagosian (founder of Gagosian Gallery), Airbnb co-founder Joe Gebbia, members of the Rockefeller and Acquavella families, Greg Maffei of Liberty Media, Dasha Zhukova (Artsy co-founder, founder of Garage Museum of Contemporary Art and partner of Russian oligarch Roman Abramovich), board members Wendi Murdoch (also an Artsy co-founder), Sky Dayton (Earthlink, Boingo), and new board members Rich Barton (Expedia, Glassdoor, Zillow) and Bob Pittman (MTV co-founder, iHeartMedia CEO).
Andrew Sugrue (co-founder of Avenir Growth Capital and formerly both of L Catterton and Shumway Capital, and a repeat Artsy investor) also joined the board as part of the round.
The funding signifies an interesting shift in the relationship between art and the internet.
Art was one of the early movers when it came to early e-commerce efforts, with startups in the 1990s building portals to sell work from established dealers and artists, and companies like eBay and Amazon partnering with the auction houses to bring lots and their auction ethos to the web.
Much of that never really went anywhere, though, partly because of skepticism about whether it was possible to be able to authenticate (or appreciate) work well enough on digital platforms, partly because the majority of buyers and sellers were not digitially-oriented, and, in the case of services like live auctions, whether the infrastructure was there to make it work.
But the art market has evolved. Galleries and artists now directly use the internet to spread the word about their work; buyers are more digitally savvy; and the quality of networks and devices to view art at its best has vastly improved.
And the infrastructure that goes into making the art market run has caught up with the times: if you look at pictures of works of art on Artsy, you can zoom in to get very granular detail, and there is a long vetting process by way of the dealer connection, much like the relationship clothing site Farfetch provides between high end fashion houses and boutiques and buyers.
Artsy has been one of a group of startups that has reaped the benefits. Others include Catawiki and Auctionata in Europe. But the economics still do not always work. Earlier this year, Auctionata went into administration and its business was acquired by another online art and collectibles business, Historia.
The global art market is currently valued at around $44 billion annually, and about $3.75 billion of that was spent online in 2016, according to The European Fine Art Foundation, a rise of about 15 percent over 2015.
“Art is one of the last consumer verticals that has not gone online,” Cleveland said today. “When we first started out, a lot of people asked us, ‘Will you ever be able to convince the industry?’ Well, we did that and then we were asked, ‘Would anyone actually ever bid on expensive artworks on there?’ Now we can definitively say Yes.”
Fun fact: Artsy was part of the first-ever Disrupt lineup of startups back in 2010 as Art.sy (the Art.sy URL no longer directs to Artsy, however).
Going forward, there are plans to add in more features as well. One of the sticking points so far has been that Artsy doesn’t have video for their auction streams.
The reason, Cleveland said, is because of the transaction distance on its platform: it attracts a global audience and so buyers can be up to 3,000 miles away from where the sale is originating, “one of the furthest of any streamed e-commerce site online,” Cleveland said. That means offering video would have too high a latency and so real-time bidding would not work.
Another are services to push more sales, of course, as a way to bringing more turnover and activity into the market.
“Despite an estimated $3 trillion of art assets in the world, only $44 billion trades in a given year—and less than 2 percent of qualified buyers participate in this market due to high transaction costs, long lead times, and limited transparency on pricing and value,” said Sugrue, in a statement. “We believe Artsy will bring this last major consumer category online and thereby substantially expand the size of the global art market. We look forward to working with Artsy to make a larger, more connected art market a reality.”
Updated with valuation figure from Pitchbook.