How Masterworks is unbundling the art market: Inside the company that lets anyone invest in a painting like it's a stock.

Dominic-Madori DavisDec 4, 2020, 00:52 IST

Jean-Michel Basquiat is one of the most notable artists of the contemporary era. He died in 1988 at the age of 27.Chris J Ratcliffe/Getty Images for Sotheby's

Scott Lynn is the founder and CEO of Masterworks, an art investment company that gives people the opportunity to invest in art who might otherwise priced out of the art market.
The platform features work from the likes of Claude Monet, Andy Warhol, and Jackson Pollock.
Earlier in 2020, Lynn offered Jean-Michel Basquiat's 1982 "The Mosque," worth $5.5 million, for investment.
In an interview with Business Insider, Lynn explains why Basquiat paintings are so expensive, gives tips for people looking to enter the art world, and breaks down how Masterworks actually works.

The price of a Jean-Michel Basquiat painting runs into the double-digit millions.

In 2017, Japanese billionaire Yusaku Maezawa paid more than $110 million for Basquiat's 1982 "Untitled," a record high price paid for an American artwork. After the sale, art dealer Jeffrey Deitch told the New York Times that Basquiat was now in the same league as "Francis Bacon and Pablo Picasso."

But what if I told you that you could have had a piece of that deal?

"Most of the investors that we talked to were either fans of a given artist or just never thought they could invest in an asset class like this," Scott Lynn, CEO and founder of Masterworks, told Business Insider.

His art investment platform is seeking to make this kind of blue-chip artwork - like that painted by artists such as Andy Warhol, Jackson Pollock, and Basquiat - more accessible to the general public.

"I believe there's a role for art in any investment portfolio," he said.

Typically, one can only invest in artwork if a piece is bought outright. Masterworks has figured out a way to break down those barriers, and it sells artwork in shares, like stocks, making the art market a game anyone can play.

"I think we're getting really good adoption from everyone that's a very small investor to even larger investors, that have wanted to invest in art but haven't really been comfortable collecting by going into galleries and interacting with the art world," Lynn said.

Lynn took Business Insider inside Masterworks, while explaining just why Basquiat goes for so much.

Art investing has always been popular among the wealthy because the category is considered a "value-preserving asset class," with a lower call risk than assets that are priced daily, such as securities.

Astrid Stawiarz/Getty Images)

Art investing has always been popular among the wealthy because the category is considered a "value-preserving asset class," with a lower call risk than assets that are priced daily, such as securities.

Masterworks, which was founded in 2017, is the first company that allows investors to buy shares that represent ownership of blue-chip artists.

ristan Fewings/Getty Images for Sotheby's

Masterworks releases a new painting every three to four weeks for investment, with share purchases beginning at $20. Masterworks says it has over 36,000 investors using its platform and is growing rapidly at 10,000-plus per month.

Leon Neal/Getty Images

Masterworks releases a new painting every three to four weeks for investment, with share purchases beginning at $20. Masterworks says it has over 36,000 investors using its platform and is growing rapidly at 10,000-plus per month.

Earlier this year, Masterworks offered a $5.5 million Basquiat called "The Mosque." It was one of the company's highest-valued paintings.

Masterworks' $5.5 million Basquiat painting entitled "The Mosque." Masterworks

Before one jumps to start investing in the art world, there are a few aspects of the market one should become familiar with. For example, Lynn said people should study the return value of works and artists they are interested in.

Self-Portrait by Rembrandt with Velvet Beret, 1634. VCG Wilson/Corbis via Getty Images)

Before one jumps to start investing in the art world, there are a few aspects of the market one should become familiar with. For example, Lynn said people should study the return value of works and artists they are interested in.

He also said to pay attention to trends in the market. For example, most people today are very interested in the era spanning Impressionism to the present - roughly works from the late 1800s onward.

Tulip Fields in Holland (with a windmill). Painting by Claude Monet (1840-1926), oil on canvas (65x81 cm), 1886. Sotheby's

He also said to pay attention to trends in the market. For example, most people today are very interested in the era spanning Impressionism to the present - roughly works from the late 1800s onward.

Those new to the art world should also be cautious of investing in high-risk artists - primarily living artists that aren't established in the secondary market, also referred to as emerging artists.

Lot 21, Basquiat, Untitled, 1984 Sotheby's

Those new to the art world should also be cautious of investing in high-risk artists - primarily living artists that aren't established in the secondary market, also referred to as emerging artists.

After finding a painting and category to invest in, the next step is to, well, invest. And if you have the means, go to a gallery, and look to buy.

The Llewellyn Alexander Gallery in Waterloo Mary Turner/Getty Images

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How Masterworks is unbundling the art market: Inside the company that lets anyone invest in a painting like it's a stock.

Art investing has always been popular among the wealthy because the category is considered a "value-preserving asset class," with a lower call risk than assets that are priced daily, such as securities.

Masterworks, which was founded in 2017, is the first company that allows investors to buy shares that represent ownership of blue-chip artists.

Masterworks releases a new painting every three to four weeks for investment, with share purchases beginning at $20. Masterworks says it has over 36,000 investors using its platform and is growing rapidly at 10,000-plus per month.

Earlier this year, Masterworks offered a $5.5 million Basquiat called "The Mosque." It was one of the company's highest-valued paintings.

Before one jumps to start investing in the art world, there are a few aspects of the market one should become familiar with. For example, Lynn said people should study the return value of works and artists they are interested in.

He also said to pay attention to trends in the market. For example, most people today are very interested in the era spanning Impressionism to the present - roughly works from the late 1800s onward.

Those new to the art world should also be cautious of investing in high-risk artists - primarily living artists that aren't established in the secondary market, also referred to as emerging artists.

After finding a painting and category to invest in, the next step is to, well, invest. And if you have the means, go to a gallery, and look to buy.