This art investment startup is luring scores of investors in the pandemic

Think of it as the art market’s version of the popular trading platform Robinhood Markets, which lets users buy a fraction of a company’s share for a few dollars

The concept of fractional ownership isn’t new in the art market | Photo: iStock

New offerings kept coming over the summer: Banksy, George Condo, Zao Wou-Ki.

A New York startup that allows investors to buy a tiny stake in paintings by world-class artists for just $20 has seen a surge in demand during the pandemic, according to its founder, and has bought 15 artworks since the onset of Covid-19 to feed their appetite. A recent $1.52 million initial public offering of a piece by the American graffiti artist KAWS sold out in a few hours.

“People feel that equity markets are overvalued and they are looking for other places to put money,” said Scott Lynn, a collector who started the company, Masterworks, in 2017.

Masterworks is at the forefront of a burgeoning niche in fractional ownership in luxury assets such as fine art, collectibles, vintage cars and even race horses such as Authentic, the winner of the Kentucky Derby Saturday. The startups offer the shares as an affordable way to invest in expensive, rarefied fields that are typically available only to the mega-rich.

Think of it as the art market’s version of the popular trading platform Robinhood Markets, which lets users buy a fraction of a company’s share for a few dollars. It mirrors the democratization movement unfolding in the stock market — except that the assets are inherently more risky and lacking of a track record. Auctions are filled with casualties, and even works by star artists can implode once prices get overheated.

The concept of fractional ownership isn’t new in the art market — or for thoroughbreds. It’s a buyer-beware investment: Robinhood itself is under pressure after complaints from novice investors and is facing a U.S. regulatory probe.

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