Why you should invest in artists, not in art
By Marine Tanguy.
If you want a return on your investment, it’s time to think about Bart Simpson.
That might sound strange, but we live in a new age of art investment, and a new era of art investors. And it is for this reason that millennial collectors descended on a Sotheby’s auction in Hong Kong and acquired $28 million worth of art inspired by The Simpsons television show.
This is indicative of the direction of the new digitised art market. The astronomical sales and intrinsic opacity of the art sector can intimidate outsiders, but if you know where to look, who to invest in, and when to sell, there are more opportunities to make money in the sector than ever before. Art has shown itself to be a strong long-term investment over the last eighteen years, outperforming most of the equity indices and increasing steadily in value. Sales in the global art market reached $67.4 billion in 2018, up from $63.7 billion in 2017. Art is often regarded as an emotional investment rather than a solid financial one, but the consistent growth of the market has created a great opportunity for people to diversify their portfolios. Investing in the big artists such as Jeff Koons and Ai Weiwei is safe because their growth is steady, but the slower speed at which your potential returns appreciate will reflect that. As an entry point, this is also an end of the market that is inaccessible to all but the extremely wealthy: Balloon Dog by Jeff Koons sold for $58.4 million in 2013.
A more accessible, more rewarding, and a riskier part of the market is in targeting up and coming artists. If you can catch an artist at the take-off point of their career, then there is a fantastic opportunity to cash in on the exponential increase in value of their work. This could be before they secure their first museum show, or before another kind of big break that significantly broadens their exposure and their market of supporters. The best way to mitigate your risk is through research and diligence. This can be challenging, as while there is plentiful data available on the most renowned artists, there are fewer information points for those in the upcoming bracket. If an artist’s work is selling for £20,000 this could be because it is being sold by a greedy gallery that pays high rent and has a couple of buyers behind it, or it could be that the artist has a strong market of over forty collectors, a series of major shows planned and multiple partnerships signed. The art market still lacks transparency, and this represents the greatest challenge to entry point investors.
I founded MTArt Agency, the first talent agency for upcoming visual artists, to respond to this untapped opportunity in the market, and to provide financial support to the best new talent in the art sector. We have found that for the more successful artists you can expect an increase in the value of works of over 150% year-on-year. We receive around 200 portfolios from artists each month, and our selection committee then selects the best and most commercially viable to sign with us. While the information on some artists is scarce, there are variables that you can analyse to determine who has the best chance of becoming successful. These can be split into two main categories: technique and character. Key technical indicators that the more talented artists display is a unique technique (one of our artists, Saype, has developed his own unique biodegradable paint that allows him to paint pieces onto the environment that are thousands of meters in size, which is an intriguing point of difference), a unique style and voice, and an artistic vision, which runs as a narrative thread through all of their work and gives them a distinct personal brand.
But the aspect always overlooked in art is the character of an artist. An artwork can be seductive on its own, but without placing it in the context of the career of the artist behind it you can’t know whether its value will appreciate. Just as a Venture Capitalist will look at the team behind a business before investing, understanding the personality behind the artwork can be the difference between investing in a future star and simply acquiring an overpriced decorative artefact.
The art world is incredibly competitive, and before signing any artist we want to be certain that they have the hunger, drive and passion to pursue a career over the next forty years. Success is predicated on ambition, an exceptional work ethic, and the resilience to deal with the setbacks this industry throws at you. It’s therefore worth spending time researching an artist to ascertain how prolific they are in producing work, and to see whether they are working in partnership with various brands and stakeholders. This can be as simple as spending time researching their social media channels to ascertain what they are working on, who they are working with and how often they are forging partnerships.
The art world is expanding beyond the traditional gallery model, so don’t be fooled into thinking that a lack of gallery representation precludes an artist from being profitable. Artists are finding new ways to commercialise their practice. We partner them with brands, government bodies, hotels, airports and a wider pool of private collectors. This diversifying of revenue streams is very new, offers more profitability for artists and offers more opportunities for investors. As a young investor myself, I have already been lucky enough to help one of our artists, Adelaide Damoah, work with UCL, the Tate and Chloé. Having signed at a point when she had no institutional recognition or major partnerships, in the space of two years her sales have increased from £3,000 per piece to £11,000, which shows the rate of acceleration that is possible.
When you uncover that rare mix of artistic talent and personality, there is no better time to invest in an artist and join them on their journey than just before their big break.