Today we are going to talk about young companies — those that either emerged as a market response to the pandemic, or appeared a little earlier, but proved their importance against the background of the forced separation of the buyer and the seller. We are bringing to your attention tenmost explicative examples:
Even before the pandemic was announced, the EU countries and the UK had been rather anxiousabout the abbreviation AMLD5 — the Fifth Anti-Money Laundering Directive of the European Parliament, aimed at strengthening the fight against money laundering and the financing of terrorism. The buyer of a piece of art more expensive than €10 thousand has been obliged to disclose the name to the seller at the territory of the European Union since January 10, 2020. The London Art Fair, held on January 22-26, was the first to face the procedure at the art market: some galleries deliberately lowered down prices to €10,000, others demanded buyers to present their passports for scanning. However, a new complication emerged after the nervous but successful sale: in accordance with the General Data Protection Regulation of the EU, galleries must store the information about buyers in a definite way on special servers and report annually as for its safety. The ArtAML startup undertook to solve theproblem (by the way, they started developing the product as far back as in 2018, as soon as the directive was announced). The application allows to scan client names along several databases, e.g.checking whether the client is a political VIP, whether he/she is under any sanctions and whether his/her place of origin and residence is a high-risk country. The app's search capabilities can also help art sellers verify and validate provenance when selling at the secondary market. And what isinteresting: if the art reports of the previous ten years are correct and collectors prioritize transparency over other market values, then ArtAML is doomed to success. Though they will have to think about the value of the primary sources of distorted data, if buyers perceive the new technology as a kind of “art-snitching”.
The closed museums have divided collectors into two provisional categories: those whose Basquiat cannot go back, being rented for the exhibition, and those whose Basquiat remained forquarantine at home. They were united by one thing: the pieces of art stopped to be active in increasingtheir own capitalization, since they were not in demand socially and expositionally (in particular). Without thinking twice, collectors turned their eyes to young artists, whose activeness during thequarantine helped increase their value, as well as to new markets. At the same time, the primary factor for a potential buyer in the era of reconsideration of pricing was no longer auction statistics, but rather some other data: the number and quality of exhibitions, participation in competitions and biennials, the level and array of publications about the artist, etc. Young artists began to massively move from Saatchi Art to ArtFacts, while proactive US curators established Foundwork, a blend of virtual portfolio, gallery, and residency providing curatorial attention and institutional support. One of the advantages of the platform is that it allows to form groups according to regional or creative characteristics, forcing artists to interact with each other and at the same time making the search easier for the collector: it is easier to go to the geographic profile on the site that unites everyone in order not to seek for 20 Czech artists at personal websites and Instagram. Another convenience of navigation is that a collector can find an artist only by specifying his/her geographic point and the desired search radius: he/she will be offered options for talents among neighbors, which is especially important when international (and sometimes domestic) logistics are unavailable.
Do you know that Larry Gagosian rents three warehouses in New York alone, one for art and two for storing art packaging? It is expensive to keep it, but its disposal is even more expensive. The founders of the British RokBox startup were well aware of this and offered Larry (and the entire market) a fundamentally new approach to packaging art. Their solution is based on lightweight transformable boxes that easily take the shape of a piece of art, providing reliable fastening and safe transportation. And the main advantage is the possibility of their multiple use at a very low cost of storage: the "transformer box" folds easily and ergonomically and waits for its time, taking up a minimum space next to the location it is to be used. Besides, the RokBox showed another advantage that greatly influenced the demand: the plastic which the containers were made of was the garbage lifted from the bottom of the world ocean and recycled. Thus the implementation of the idea meets the most important characteristics of a startup: it solves an existing problem, does not create new ones, and broadcasts an important (in this case, environmental) idea to the masses.
4. Fair Warning
Having made a name for himself on the record sale of Leonardo da Vinci's Salvator Mundi, a young Christie’s employee Loïc Gouzer left the auction house and tried to monetize his own fame — in particular, by announcing the establishment of an elite virtual auction house. According to him, the frenzied information traffic, amplified by the pandemic, led to the fact that, even prior to the start of the auction, collectors began to lose interest in the pieces of art placed at the auction catalogs a few months before the event and to switch their attention over to "fresher" lots (the situation is normal for any internet offering, it is funny that it has affected such a conservative area as art auctions). As a solution, Gouzer has made a mobile application that is only accessible to select top customers, the auction catalog will include lots of the highest price category, pieces of art will be announced just a few days before the auction, and the auction itself will take at most a couple of minutes. In other words, the Fair Warning startup is an analogue of an underground poker tournament: none of the participants knows where and when it is held, what the stakes are until the day of its holding: the secrecy is the key to its popularity.
"Better call Saul," was written on the business card of a character of a popular American TV series. The Glass startup could well beat this phrase, replacing only the name: since the moment the application was launched, its founder Christian Hunt has been ready to answer the owner all questions related to the provenance of his work. To do this, you just need to send a photo of a piece of art to a special chat of the WhatsApp messenger. Then the system recognizes the image and sends all the available information from the catalogs-raisonne or the documented provenance of this work in a response message to the owner. Naturally, it will not be Hunt on the other end of the line, but an autonomous robot with a database of 10 million works from more than 1,000 sources (digitized back in 2014 for another Christian Hunt’s project - the Artwishlist art trading platform, which has never become the second Artsy). The WhatsApp chat, which helps determine the place of the work in the history of art, is definitely a necessary and simply ingenious thing. However, for some reason or other, the story of Engineer.ai stubbornly comes first to the memory: a company with multimillion-dollar investments presented the work of 26 thousand Indian programmers as the work of an artificial intellect for many years.
According to Anders Petterson of ArtTactic, this startup characterizes the 2020 market in the best way — and we fully agree with him. The game starts with the title: Otis is the namesake of a leading company producing elevators and escalators which transport the number of people equal to the world population every week (as it has been calculated!). This is a subtle hint for the essence of art Otis: the original version of the platform was an endless conveyor belt, where offers for sale were consistently laid out — from limited KAWS figures to collectible sneakers and exclusive comic editions. The key word was “sale” (the English “drop”, “a blowout”, conveys the mood more accurately): we remember that the main motive force in the minds of Gen Z buyers is to outstrip competitors in the struggle for a rare artifact — a virtual analogue of the Western Boxing Day. And the final cost of the item is not particularly important: the main thing is to show the buyer how much he has saved as compared to the usual, "market" price. The Otis platform has already gone through a transformation since its launch: the ability to acquire a discount asset into collective ownership has been added. The next predictable step is the opening of a fraction exchange, where the distributed assets can be freely traded. However, Otis has already got enough competitors in this area, the most serious of which is going to be mentioned below.
The British Kovet startup has also decided to play in words with the name (which may have to be changed in the future): its name sounds almost similar to the official name of the coronavirus. Kovet is an educational incubator focused on the development of the career of an artist, a mix up of a lecture room and an art residence. After Hauser & Wirth loudly announced the establishment of a large-scale virtual residence in April, 2020, and Quarantine Residency tacitly connected artists from Turkey, China, Indonesia, the USA, and Tanzania, a group of British curators from Kovet did something in between and visually inexpensive, having highlighted an effective marketing message in the subtitle — "An expert guide to the evolving art." Two pressing questions of 2020 are at the heart of the Kovet business idea: how can young artists efficiently make themselves known when the whole world has moved online, and how can a collector find a grouped artist community with a minimum of Internet navigation and link clicks? The British promise both an acceleration of a creative career and profitable positioning through exhibitions with the involvement of renowned curators. It should be stressed separately that the “portfolio review” format has been used in transit from the photo market, in which artists are able to show their personal manifestos and works simultaneously to several curators live — and immediately receive reviews to correct their vanity and creative plans.
A lot of companies have been active in the development of tools for profitable visualization of exhibitions since March, 2020: most of them started a few years earlier (VR-All-Art, Kunstmatrix), others quickly re-profiled their business (Artlogic, Softspot) for the establishment of virtual offices and entire fairs. The V-Art project, made by two Kharkiv lawyers early in 2020 (which was no coincidence: Kharkiv is a technological and legal center of Ukraine with two leading specialized universities), at first seemed a stranger against this background: its key idea was a trading platform for digital art with electronic certificates for maximum protection of the owner and the artist. However, the visualization of digital collections required the connection of virtual and augmented reality — as a result, the Ukrainian team simultaneously created almost the most perfect product in the field of virtual exhibitions. And business tilts where the demand is: today V-Art simultaneously sells both digital art, NFTs and online offices (moreover, the architecture and design of the latter are made individually for each seller). An innovation offered by the company in the era of limiting live communication is virtual chats with avatars, in which visitors to online exhibitions can communicate with each other. Taking into account that most of the adult visitors of inaugurations have in mind their dating but not cultural component in many instances, the platform has been called NFT Art-Tinder in absentia by the startup community.
9. The Art Exchange
When the publisher and collector Inna Bazhenova took the stage of the Deloitte Art & Finance conference in October, 2019 for the closing address, most of those present thought: she would speak about the international Art Newspaper. And they were surprised: Inna Bazhenova presented a completely new project - the exchange of fractional ownership for art objects and collectibles on the The Art Exchange blockchain. The commercial component of the issue has partly caused the surprise (with regard to art, Inna Bazhenova has always remained a philanthropist, and a successful businesswoman — with respect to everything else), partly because a dozen of companies (Maecenas, Look Lateral, etc.) broke lances and budgets over fractional ownership through tokenization (transfer of physical assets to the digital world). In short: since July 26, 2017, digital assets, on which an individual can theoretically earn or lose, have been considered securities by the US regulator and need to be registered. And the principles of such a registration in relation to art have not yet been spelled out (each piece of art may be considered as a single share: so how to arrange their release?). Instead of lobbying for legislation, the war moved to the legal aspects, in which the main role was taken by lawyers: those who volunteered to prove which asset could be considered securities and which not, ensured themselves a well-off retirement (or residence permit in Guantanamo). The Art Exchange lawyers and financial consultants have offered almost the only possible option, bringing the art out of the hot zone and releasing digital derivatives — futures and contracts for difference. The company was active last summer and has already offered to invest into a share of deals with the first line works — from Anish Kapoor to Lucio Fontana. We are going to follow them closely.
The Cappasity 3D visualization platform started out long before the COVID-19 pandemic, making VR and AR solutions (virtual and augmented reality) for many brands, including Samsonite, Jazmin Chebar and the TsUM department store in Moscow. The simplified process of digital scanning of a piece of art and the highest quality visualization were not the only advantages: the customer from among the sellers was offered analytics — which of the elements of the virtual product the user enlarged to its maximum on the screen, which angle of rotation in 3D he was considering the longest. Thus, the seller could adjust his/her advertising campaign for "static" images in terms of the most advantageous angles and details. Closer to 2020, Cappasity began to penetrate the art market — and it started with the academic part: the New York Academy of Arts and the Academy of Art, University of San Francisco, were interested in visualizing student sculptures. Then more and more: at the moment, Cappasity is preparing to occupy the niche of electronic expertise and attribution, which, in conditions of isolation, needs high-quality visualization and the ability to view works in 3D. The success in this area can be judged by the results of the 2022 TEFAF: the fair of old masters and antiques may not use the Cappasity technology for its announced electronic expertise, but it will form public opinion with this precedent.