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How Masterworks Is Leading the Evolution of Finance for Blue Chip Art Transactions

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How Masterworks Is Leading the Evolution of Finance for Blue Chip Art Transactions

Art has long been used as an investment as well as a source of delight and contemplation. As an asset that can outperform inflation and is not correlated with other assets, art — particularly blue chip art — serves as an excellent hedge against economic turbulence. 

This has made it particularly attractive over the past few years of extreme uncertainty and turmoil, and will likely continue to do so for the next few years too. Records show that over the past quarter-century, contemporary art has driven average returns of 12.1% annually, 1.9x that of the S&P 500 over the same time period and with only negligible correlation to that index. 

Yet blue chip art was also long out of reach for many people. Finance served as a near-impenetrable barrier in a number of ways. Ordinary investors struggled to access the funds needed to buy blue chip artwork, were deterred by the difficulties liquidating those funds when necessary, and lacked the networks to help them to find buyers. Additionally, even art lovers weren’t confident that they could select paintings likely to appreciate over time.

A startup called Masterworks, and the investment platform that bears its name, were established some five years ago to change the way finance works for blue chip art, bringing down those barriers and removing obstacles that impeded cash flow around the art market. Since that time, it has gained momentum from the growing trend of democratizing finance, alongside approaches such as P2P lending, crowdfunding channels, and decentralized tokens, currencies, and finance platforms in general. 

The success of Masterworks is clear. Five years down the road, the platform has close to 400 individual painting investments totaling $1 billion in value under management, over 880,000 members, and no less noteworthy, it’s brought a breath of fresh air to finance pathways for blue chip art. Here’s a closer look at the ways that Masterworks has altered finance for art investments.

Lowering barriers to entry

Masterworks has successfully applied the fractionalized investment model to art. 

Each artwork that it offers is securitized with the SEC, which turns it into an LLC that is then divided into a number of shares. Those shares are offered for sale for as little as $20, making it far easier for investors to find the funds to invest in artwork. 

Typical art investors enjoy their art in their homes, but that’s not an option for fractionalized investors. Masterworks’s new gallery, Level & Co, lowers these barriers too, by exhibiting its art on an appointment basis for those who own or are interested in the artworks. This allows investors to view and interact with their art up close, unlike typical fractionalized purchases. 

Improved liquidity

As mentioned above, liquidity is a key concern for retail investors thinking about buying art. 

Masterworks has addressed this by setting up a secondary market where people can trade their shares in artworks whenever they like. This enables far faster access to liquidity than selling or auctioning your artwork. 

It can take months or years to find a private buyer, and auctions take time and effort to set up. Sellers need to arrange a meeting, agree on a reserve price, and may have to wait until the auction house has more items to present in a single event. You’d also need to pay for shipping, storage, evaluation costs, and more. 

Smoother paths to purchase

The art world typically functions like an exclusive club, with buyers and sellers finding each other through long-established and sometimes complex networks of relationships. This too serves to bar entry to retail investors. 

Masterworks opens up pathways to connect buyers and sellers, to ease the journey for art sales.

Level & Co plays a role here too. People who are not part of the traditional art world can visit the gallery to view the art, and meet art aficionados and financiers at the same time to expand their networks and forge those relationships. By exhibiting fractionally owned art, Masterworks also creates opportunities for high net-worth investors to view artworks and make an offer to buy, which is less likely to happen when the art is in a warehouse on the outskirts of town.

Support for purchase choices

Trends in demand for art styles and artists change frequently, so it is difficult even for an art lover to determine which pieces are most likely to increase in value and would therefore be suitable for investment. While there is data from auctions and public sales, it is not standardized or centralized, making it very difficult to assimilate into a solid prediction. Additionally, private sales data is kept private, so there’s no way to know the prices that many items changed hands for. 

Masterworks gathers data from auctions and auction catalogs, together with “repeat sales data,” namely the price paid for the same artwork at different times. It then analyzes the data to produce a price index that indicates which pieces are predicted to appreciate in value. The company also does the legwork in verifying the artwork’s provenance. Investors may not have the time or knowledge to do this, but it’s vital to prevent nasty surprises that could lower resale value.

It’s worth noting that this data-based approach has driven significant performance success to date. 2022 saw Masterworks pay returns totalling $25 million to its investors, and eight of the last nine sales it held resulted in 14% average annualized returns. Even the company’s worst-performing piece, by Andy Warhol, delivered 4.1% annual gains, and the highest-performing artworks are driving well over 100%, with a piece by Cecily Brown showing annualized net returns of 788.1%. 

Blue chip art finance models are receiving a facelift

Masterworks is spearheading a refreshing and more open approach to art investments that presents a disruptive model for fine art finance. While the traditional model of private sales, exclusive networks, and exclusive auctions is likely to continue for some time, it’s no longer the only option on the table. 

About Autor

Virginia Andrus is an independent Digital Marketing Consultant with 6+ years of marketing experience. Virginia is a chef by heart. In her free time, she is either writing marketing copies for brands and agencies or experimenting with new recipes at her home.

How Small Business Should Think About Financing

It’s no secret that over half of small businesses close their doors within the first five years. One of the critical problems that often occur has little to do with the innovation, ingenuity, or work ethic of the small business owners themselves, but rather the lack of access to sufficient capital to cover the ebbs and flows of their operation and its associated costs. 

Scaling any idea or enterprise, to me, is less often about “entrepreneurship” —and other catchy terms we can print on a business card— and more about meeting the demands of others, like payroll and customer expectations. Simply put: small business owners need capital resources— they need cash. 

Historically, small businesses have had limited options to access capital: savings, friends and family, credit cards, traditional bank loans, or the occasional SBA loan. Enter the financial crisis of 2008-2009, which ushered in a new regulatory environment that contracted these historic capital resources, thereby creating the market-driven need and demand for non-traditional banking options.

Consequently, we find ourselves operating in a new era, one in which enterprising nonbank funders have brought novel and different capital products to the small business market. This has been largely accomplished through an ambitious mix of fintech and financial innovation. These previously unavailable financing options give small businesses more resources to consider than ever before. Now their next step is to explore them and consider how their small business might decide on the best option for their specific needs. 

As we contemplate these innovations, here’s a quick list of some of the best financing options available to small businesses:

Business Term Loans: Best for businesses looking for working capital, equipment purchases, or to purchase inventory or other fixed assets. For short-term loans, it can often be matched to a specific project and repaid to coincide with the completion of that project in 6 to 12 months. For longer-term loans, the repayment can be stretched out to 3 to 10 years, but these often require higher levels of collateral coverage or a personal guaranty by the business owner. 

Pros: Great product for larger one-time investments with targeted cash loans flow that payments can be matched. 

Cons: Larger dollar amounts and a longer payback term will require increased time, energy (think: bank meetings and interviews), and documentation. 

Equipment Financing: Best for one-off purchases like restaurant equipment and machinery. 

Pros: no upfront spend; if the business owner has impaired credit the fact an asset is involved as collateral can make it easier vs. purchasing the equipment; and tax-deductible.

Cons: Overall cost is usually more expensive in the long-run; cost inclusive of fees if the lease is terminated early can be substantial; and must take into account all terms and conditions that can be complicated (who handles and addresses a break-down in the equipment? etc).

Small Business Administration (SBA) Loan: Best for business owners who need capital for a variety of longer-term business expenses. It is government guaranteed so the process can be daunting and is processed through a bank that has an SBA loan program. 

Pros: Cost and longer-term repayment; great product for owner-occupied real estate.  

Cons: Requirements are strict; process is time-consuming (60 to 180 days); high upfront fees; and requires strong personal credit scores.

Business Line of Credit (“LoC”): Best for businesses with more volatile sales and cash flow. Flexibility to drawdown and repay based on the needs of your business.  Often secured by accounts receivable and inventory. Some LoC’s offered by FinTech operators do not require business collateral but do require a personal guaranty.  

Pros: Can access quickly (assuming facility is in place) to solve urgent issues or expenses; and great for managing working capital needs and the business’ short-term cash flow needs.  

Cons: Reporting can be much more intensive vs. other products available; upfront and ongoing fees can be expensive, especially if the LOC is rarely drawn down.

Revenue-Based Financing: This is a financing option where the repayment schedule is tied to the future revenue of the business. The genesis of the product is that the funder operates as more of a partner and is taking some level of “equity-risk”. If the revenue decreases or the business fails, the repayment is either stretched out or in the case the business fails the funder has no recourse. Small businesses can utilize this product for project financing, working capital, growth investments, or short-term needs. 

Pros: Quick access; repayment risk mirrors the revenue; no business or personal recourse except in the case of fraud.  

Cons: Products are generally 12 months or less; more expensive given level of risk with limited recourse; reporting can be intensive as changes to payment schedules requires bank and financial verification.

Invoice Factoring: The business can turn its unpaid invoices into immediate cash. The invoice factoring company collects directly from the customers and distributes capital to the business, net of its fee. 

Pros: good for managing cash flow; typically a short-term financing product (30 to 90 days).  

Cons: cost can be expensive, especially if repaid much quicker than anticipated; can be disruptive notifying customers to change their payment instructions to the factoring company; requires technology integration or higher level of reporting and the business’ customers will be dealing directly with your funder if they delay payment – not you as the business owner.  

Angel Investors/ Venture Capital: Best for small businesses who want to scale quickly. 

Pros: entrepreneurial background provides increased insights and foresight vs. dealing with alternative finance providers, banks, or the government; larger investor network to leverage for additional funds or additional business; and capital remains in the business (vs. interest costs). 

Cons: Higher rates of returns expected (typically at least 5x their investment); requires giving up equity in the business; process will be intensive; typically reserved for high visibility, disruptive companies pursuing large addressable markets on a national or global scale; and will require operating agreement additions to governance to protect their investment in the case of underperformance.

Bootstrapping: Best for businesses with principals that have savings or expendable income who want to preserve equity ownership and cash in the business. 

Pros: maintain ownership position and keeps all cash generated either in the business or available for dividends. 

Cons: Growth limited to the owner’s cash position; risk missing market opportunity because thinly capitalized; challenging if a short-term need requires more cash than available.

While the pros and cons of this list provide a guide to financing in 2019, any financing decision should ultimately come down to your assessment of the cash flows of the business (today and in the near term), demonstrated capacity to handle credit, costs versus profit opportunity (positive ROI), and repayment thresholds. 

The good news is, enabling technology allows small business owners to access various forms of capital quickly and efficiently. There is no day like today to explore options to fund entrepreneurial dreams. 


Vincent Ney is a founder and CEO of Expansion Capital Group, a business dedicated to serving American small businesses by providing access to capital and other resources so they can grow and achieve their definition of success. Since inception, ECG has connected over 12,000 small businesses nationwide to approximately $350 million in capital 

Poker and Business: How Poker Skills Mirror Negotiation Tactics

Similarities exist between strategic poker play and negotiating or operating in private enterprise. Few have likely given it serious thought but if they did commit brain time to the subject, they’d see how table image, portraying yourself as stronger than your hand may be, body language, controlling the look in your eyes, displays of sincerity or weakness all are exemplified in both scenarios.

Negotiating the price of purchasing a business, negotiating with vendors, discussing sensitive matters with employees and a host of other things that regularly occur in business may also happen in many poker hands one engages in.

In my earlier years, the risks I took with a new business venture certainly had me all-in more than on a poker table. On a table your all-in move is limited to the chips in front of you. When I went all-in on a business, it would also include debt in addition to the available capital (as in chips) immediately accessible to me. 

When negotiating for products or services with vendors, I’ve found many of the matters being discussed would contain pricing variables an astute business owner could avail themselves of if they try. In poker, nothing is cut and dry. Pocket aces get cracked, a full house on the turn can be surpassed by a bigger boat on the river and a check with a monster pair could give your opponent a free look at a card on the board that fills their hand with a pair-beating result. Similarly, in business, good timing and the right move can advance your position when played right and implemented at the optimum time.

Table banter makes the game fun but could reveal things about your game philosophy that an observant opponent could use later in a hand to relieve you of some of your chips. Likewise, the things a business owner may say in front of an observant employee could certainly rear its ugly head my way when dealing with a human relations-based employee issue. As a pivotal point in my autobiography, Tenacity, describes in graphic detail, my casual comments within earshot of someone who would later be found out to be a thieving waiter would result in some life-altering consequences for me. 

Every word you say and every act you perform possesses the power to affect you in ways you’d never imagine. Being ever cognizant of the things you say and do on a poker game are as important as the profile one portrays in their business life every day.

Ron Coury is the author of Tenacity: A Vegas Businessman Survives Brooklyn, the Marines, Corruption and Cancer to achieve the American Dream: A True Story

5 Trends Changing Business Payments in 2019

Suddenly, business payments are hot. 

I’d say there’s a growing level of understanding of the space and a feeling that B2B payments are starting to come of age. That is good news for customers, considering decades have passed since there was innovation in this space.

Here are 5 trends for business payments in 2019:

B2B payments innovation has begun

Many of the people who wanted to meet me were venture capitalists and private equity partners. B2B payments is a very, very large market—36 trillion in payment volume—versus about three billion for consumer payments. Most business customers are still paying with paper checks. This has always been an interesting category because it’s so big, and so far behind in digitization. Now, as the consumer payments technology market is becoming saturated, B2B payments have captured the attention of the investment community. There are a lot of new investments happening, so look for offerings related to B2B payments in the next few years.

Payments as a backbone

Vendor payments are tied to a lot of other processes. Once you digitize payments, it opens up opportunities with procure to pay, dynamic discounting, supply chain financing, and lending to name a few. For example, we’ve already seen Uber experiment with making auto loans to its drivers and taking the loan payments directly out of their pay. Companies should look to digitize payments with an eye to efficiency and cost savings now, and as a springboard into other innovation opportunities down the road.

Full payments automation

The first wave of new entrants in B2B payments has already hit the market, and many of their value propositions sound the same—cloud, simple, automated. But, not all of them are really in the cloud, simple, or automating the whole process. B2B payments have long been plagued by partial automation, and that’s a big reason why so many businesses are still stuck on checks. Cards and ACH make the transfer of funds electronic, but they also introduce new manual processes for file preparation, reconciliation, and vendor enablement. New, truly automated solutions can handle every part of the process. The person in accounts payable should only have to select the bills they want to pay and click the “pay” button. Buyers need to look past the marketing language and check under the hood.

Banks embrace fintechs

Five years ago, the relationship between fintechs and banks was adversarial. There was a lot of talk about fintechs using technology to take over different aspects of banking and to do it faster, cheaper and better. Over the past 18 months or so, we’ve seen the conversation shift. There is a growing recognition that banks and fintechs have very different strengths and that they will be stronger together. Bank and fintech relationships are now starting to form. Examples include’s relationship with JPMorgan Chase. The idea is to bring’s solution to small businesses through the bank channel. Chase’s recent acquisition of WePay provides an application for three-party payments for platforms such as ConstantContact and GoFundMe. This is just the tip of the iceberg; we will see many more partnerships and acquisitions in 2019.

Blockchain is still a technology to watch

Blockchain, the distributed ledger technology that underpins Bitcoin, is still very much part of the conversation. This is the only technology that truly has the potential to change banking and finance as we know it, providing a new set of instantaneous, decentralized, global payment rails. Banks and fintechs such as Ripple and Earthport are collaborating and getting traction, demonstrating they have a value proposition. But, if banks find ways to control it, it may end up being a better experience, but it won’t be any less expensive than current options.

All of these developments are great news for customers because the market is picking up speed and companies will have a lot more choices than in the past. B2B payments are far more complex than consumer payments, and there’s next to no technological innovation applied to them until very recently. Companies have lived with the status quo for decades. That is all about to change.

As fintechs encroach on core bank activities like lending and payments, banks are going to step up their game by either improving their own services or teaming up with the innovators. 

Karla is Chief Executive Officer, Co-founder, and member of the Board of Directors at Nvoicepay. She has 20 years of experience in management, finance, and marketing roles in both large and early stage companies. Along with the founding team, she has grown Nvoicepay into a leading B2B payment network