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. lets digital artists and creators create (mint), sell, and trade the blockchain-verified unique crypto assets known as NFTs. It also had great numbers, but Banksy has pop culture recognition in a way that Jonas Wood doesnt. That gives a lot of comfort to smaller investors who have questions about how we know its authentic and how we know were not overpaying. Scott Lynn, Founder of Masterworks, explains how his company creates a market for selling and trading shares of million-dollar paintings. Note that the Masterworks secondary market is only open to U.S. citizens who have a bank account with a U.S.-based bank. A lot of that was our fault in terms of things that we had in the offering circular that were technically wrong or complex. Were happy Masterworks aims to make blue-chip art more accessible. With Masterworks secondary market, investors can sell their shares earlier, but this platform is still best for those with medium-to-longer time horizons. We thought that but we didnt actually know that. Blocking categories may impact your experience on the website. and they will definitely take care of you, masterworks.io. Heres what Im thinking of. For investors who have a strong interest in contemporary art, this might not be a major disadvantage. I think five years from now, well be at one million-plus users. Where do you want to be five years from now? Long term, we dont want to be in the business of running galleries. The 20% sale commission to the end user is the most significant source of revenue for Masterworks. Were now at the point where were selling about one a month. How do current events affect you? Theyre not digitized. 1201 N. Orange Street Suite 7160, Wilmington, DE 19801, United States. Once the sale of an art work is complete, Masterworks distributes all proceeds to investors who own shares in the work, prorated by the number of shares owned, minus its own cut of the profits (more on that below). Theyre not a Monet doing $250 million, but compared to your average artist in a gallery, theyre much more stable. But todays options for valued art and collectibles have exploded, particularly with the rise of blockchain and non-fungible tokens (NFTs). In addition, its open to any type of investor. From day one, weve had a general counsel and legal team. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. SL: We have 37,000 investor accounts now and will have 100,000 by the end of the year. Theres no need to worry about acquisition, transportation, and storage of the artwork, and you can get started without having to spend hundreds of thousands of dollars. There are always segments that could be bubbles, but Id say thats more galleries selling $50,000 paintings and people thinking they might be worth $500,000 in the future. While the management fee and 20%-of-profit fee are in line with a hedge fund's industry standard, these fees are relatively high when compared to investing in something like a market-tracking index fund. We signed up 600 investors yesterday. Obviously, wealth taxes are one logical answer. There are two ways an investor can get a return, Lynn said. How the Web3 stack will automate the enterprise, Why Web3 represents a new frontier for personal data ownership. Select independently determines what we cover and recommend. The Masterworks business model has been praised for democratizing high-end art as an investment. The sale of fractional shares to high-net-worth investors, storage fees, and insurance fees contribute to the companys overall profitability. Masterworks could be a good option for people who want to add alternative investments in fine art to their portfolio, but would prefer to avoid the costs, risk and hassles of buying entire works of art themselves. Masterworks plan is to continue purchasing investment-grade artwork and giving individuals a chance to see a return on their investments. Obviously when we started a year and a half ago, we were holding them much longer, but theyre moving quickly now. How do you get your funding to purchase the paintings? WebScott Lynn. Founded in 2017 by Scott Lynn, Masterworks is a groundbreaking platform that offers individuals the opportunity to invest in shares of high-value artwork. The Company's core holdings* include a network of five of the top 10 largest non-gaming convention center hotels in the United States based on total indoor meeting space. WebScott Lynn is Chief Executive Officer at Masterworks.IO LLC. Scott Lynn - Founder @ Masterworks - FinNotes You have all these opportunities for liquidity in the market. The artwork is then registered with the SEC (Securities and Exchange Commission). However, the Class A structure is distinct because it splits ownership up between multiple buyers. All of the big names, those artists arent going away. Investing in fine art has conventionally been the special preserve of the very wealthy. Masterworks CEO Scott Lynn returns to Invest Like a Boss after appearing on the show for Episode 146 in June 2020. From a marketing perspective, were not trying to target those types of people. Artwork does not generate any ongoing cash flows, like interest payments or dividends. Masterworks Review 2023 Forbes Advisor But at the end of the day, you need to decide which works are the best fit for you.