While the majority of online lending platforms currently available in Australia focus on providing individuals with small personal loans or startups and small businesses with loans to help them fund growth, there are a couple emerging with a new focus. One such platform is Edstart, which provides parents with loans to help them fund their child’s education, while Art Money aims to help people buy art.
Launched by art engagement company 10 Group in April 2015, Art Money was established with the simple goal of making it easier and more affordable for people to buy art.
As founder and 10 Group CEO Paul Becker puts it, Art Money is “an enabler, a means to an end, which is increasing access to art.”
As an art engagement company, 10 Group’s work focuses on creating opportunities for engagement with contemporary art through various initiatives, such as membership programs, corporate events, or full-scale festivals.
Through this work, Becker said the organisation saw people wanting to engage more with art but facing barriers to doing so. At the same time, artists and galleries have both a creative and commercial imperative to make and sell work.
“Both sides of the market have the same objective, but they weren’t being brought together. The finance side is not the only thing getting in the way of increased art engagement, however it is a big one. Every other industry had solved this finance problem, but not the art world, for various cultural and ideological reasons. I wondered if I could do something about that,” he said.
And so Art Money was born. The platform works by having interested users apply for a loan of up to $30,000 online (recently upped from $18,000), then finding art to buy at a partner gallery.
Once they have found a piece they want to buy, the user confirms the artwork price and then pays the gallery a 10 percent deposit directly. They then log back onto Art Money to finalise the purchase, with repayments to be made over nine months.
Given the barriers faced by both sides of the market, galleries, artists, and consumers alike were easily impressed by the platform – it has already loaned out $1.4 million in partnership with 130 galleries across Australia. The biggest challenges, Becker said, came with figuring out the regulatory environment and funding Art Money itself.
“The banks and financial institutions are very set in their ways. There was a big upfront regulatory compliance cost – we obtained a credit licence in Australia. At the same time we also had to source finance, as we pay the galleries before we get paid so the more successful we were, the more we needed to borrow,” Becker said.
“As a first time founder, I have discovered doing an investor raise is an all consuming job in itself. By comparison, building the business and gaining support from the industry and customers has been relatively straightforward.”
The platform was established with the assistance of a grant from the City of Sydney, with Becker adding that the Council’s endorsement of the platform’s work as being good for our culture, as well as its marketing and PR support, was “instrumental” in getting Art Money off to a good start.
“I think it’s a great example of a public/private partnership working well with mutual goals,” he said.
After more than a year in business, Art Money has gained a number of insights into the art community and its target market, most importantly finding that the platform enabled 30 percent of borrowers to buy their first ever work of art from a gallery, while another third are regular collectors. The average loan amount is $5,000.
“The demographics skew a bit older than one would think – interestingly this not just an affordability issue. In fact the vast majority certainly could afford to buy their art outright, but buying this way allows people to feel more responsible and in control of their purchasing. I think the heart has always said yes to buying art and now the head can follow,” Becker said.
Following its success in Australia, Art Money is now looking to expand into the US market with the help of $2 million in funding. $300,000 of this is being raised through equity crowdfunding platform VentureCrowd, recommended to Art Money by one of its existing investors.
With the remaining investment coming from international investors – the global art market is worth $60 billion and is estimated to grow 7 percent year on year – Becker said listing on VentureCrowd felt like a good opportunity to involve as many Australian investors as possible.
“I’ve had a lot of support from the Australian startup community and, as an Australian company launching an international business, having a good range of Australian investors seemed a good way to support the idea and process of Australians taking innovation to the world,” he said.
As it looks to close its funding round, Art Money is focused on its US launch and continuing its growth across Australia and New Zealand, which will be its test market for product development.
Image: Paul Becker. Source: Supplied.