Platforms Which Will Have Impact - Maecenas Discover a New Way to Invest in Fine Art

Etienne Verbist on behalf of Artdependence Magazine talks to Marcelo Garcia Casil (MGC), Miguel Neumann (MN) and Jerome Croisier (JC), Maecenas.

EVB: Who are you and why did you create the platform?

MGC: We are a start-up company looking to disrupt the art finance industry. Our online platform removes intermediaries like auction houses and art dealers by creating an open and fair marketplace where investors can reach out to art owners directly in a secure and reliable way.

MN: In this case we are referring to merchants who instead of acting as adviser take advantage of market asymmetries, or galleries who being in a position of power disproportionate fees to new artists. We are also referring to specialised art lenders who simply hand over investors’ money to collectors or families in dire need, but not without taking a large commission and charge extremely high interest rest on the pretence of compensate for the risk of underwriting.

MGC: We created Maecenas because we believe that technology can address the biggest challenges that the art finance industry currently faces by improving transparency, reducing costs and creating liquidity. We want to make the art industry a better world for everyone. 

MN: Both Jérôme, who spent his entire career in the industry, and I have had exposure to the art market, and we agreed that it is was an elegant market to work with, which resonated deeply with many of our supporters and investors.

Maecenas has been built on the following four pillars.

DISINTERMEDIATION - A true open platform connecting artists, collectors and investors directly.

PEACE OF MIND - A strong legal framework backed by provenance documentation that is protected by cryptography, thus making it impossible to falsify.

TRANSPARENCY - A feature-reach art investment marketplace where participants can browse a range of professionally vetted and curated selection of fine art pieces presented alongside historical prices and performance against benchmarks.

REDUCED COSTS & LIQUIDITY - Maecenas platform makes it possible to build and manage a liquid portfolio of art-backed instruments, therefore eliminating the costs associated with investing in physical art. 

EVB: Why do you do what you do?

MN: because we love what we do. Also, because we truly believe that the smart use of technology can enhance the relationship between artists, collectors, galleries and investors. I feel more investors want to put their capital behind assets they deeply connect with, and I know that collectors and galleries should have a better way to access capital markets.

EVB: What’s your goal?

MN: Our goal is for Maecenas to become the largest and most trusted marketplace for art investment. "Technology-driven businesses have a clear potential to support the emergence of Art & Finance, through increased liquidity, lower transaction costs and more transparency" - Deloitte Art & Finance Report.

EVB: What will be the impact of your platform?

MN: We know that by bringing more transparency and efficiency to art investment we will increase the amount of wealth devoted to art, which in itself is something amazing. We feel great when we think about all the work (restoration, new commissions, larger collections) that our platform could enable. In a way we want to stay true to the name of the platform.

EVB: How does the Maecenas platform work?

MGC: Maecenas leverages an innovative technology called blockchain to create digital certificates linked to pieces of art. These certificates are highly secure and impossible to forge thanks to the use of advanced cryptography. A single artwork is broken down into thousands of certificates, similar to how a public company issues shares.

Investors can purchase these certificates to own a percentage of a given artwork, and they can sell them back to other investors at any time, which creates the much-needed liquidity that the art industry currently lacks.

Because certificates are fully digital, transactions can be settled in real-time and carry virtually no cost. This is truly revolutionary technology and we believe that it will give the art industry a huge boost.

EVB: What is your dream project?

MN:  We are working on our dream project. None of us would rather do anything different, I don’t think.

EVB: What role does the artist have in society?

MN:  Artists are the voice of society, a mirror of what we do not want to see, and a relief at the same time. The role of the artist is to heal, to feed, and to nourish the souls in tormented times; to bring beauty, define and protect beauty.

EVB: What memorable responses have you had to your platform?

MGC: We have consistently received extremely positive feedback about our platform by collectors, individual investors and wealth management firms. Primarily we’ve been praised for our efforts to democratize access to fine art investment. This is an industry which is unfortunately tainted by a history of fraud and money laundering, and is in need of transparency and fairness. We strongly believe that Maecenas can contribute to changing that.

EVB: What do you dislike about the art world?

MN: The art world over the years has exploited misinformation, misattribution and information asymmetry. We are trying to mitigate those issues with what we do, for a cleaner, honest, value generating interaction between parties.

EVB: What role does art funding have?

MN: A very important one indeed. Through art funding the world preserves a key part of our cultural patrimony, and an invaluable heritage for future generations. Think of certain masterpieces as endangered species, that require an enormous amount of effort and capital to just make it in a good condition for another generating to see it.

EVB: What research do you do?

MN: We constantly look into the fluctuation in art trends and its economic/financial value; we monitor new technologies and platforms and we study every type of investment model out there.

Some of our references are TEFAF, Mei Moses and Artprice for quantitative data, Sotheby’s and Christie’s for qualitative, in addition to Deloitte, Barclays Wealth and Knight Frank among other for collectibles as part of investment and wealth strategies.

EVB: What’s the best piece of advice you’ve been given?

MN: Not too long ago, the CEO of Nutmeg told me (and many other entrepreneurs) something like this “Do not go around asking for advice or permission. Get off you’re butts and go do stuff.” If I remember correctly the phrase was peppered with a generous amount of swearing in it too!

EVB: What would you have done differently?

MN: I think all we have done is part of the journey of growth and learning. Personally, I wish we would have made things easier for ourselves, as we didn’t choose a simple problem or industry to tackle. Being ambitious comes at a price and we have all seen the impact in our personal lives… that said, I don’t think anyone has regrets so far. Working with people I would call true friends, who are always willing to go the extra mile, makes everything worthwhile.

EVB: What is the role of the people, the crowd in your project?

MN: There are two defined roles, asset owners looking to raise funds, and investors looking for exposure on the art-based assets that owners list.

EVB: How can they participate in your project?

MN: They can participate either investing into assets in the platform, or pledging part of their collection to raise funds. The sign-up process is straightforward.

EVB: How are you connected with the people or the crowd?

MN: It really varies, but given that this is a relatively new venture, we know many of the members, so most of the users have a degree of connection with some of us.

EVB: The crowd economy creates meaningful experiences and shared value, how do you see it for your work?

MN: We absolutely believe that this is the case. Our platform embraces that ideal, delivering better funding options for collectors and allowing investors to syndicate. I don’t think many people would refuse to owning a slice of a Picasso so long as it is within their budget, and through the crowd economy we can make that possible.

EVB: CO-Creation and participation are emphasized in the crowd economy and communities take an active stake in crafting positive futures.

MGC: That’s the real key value in crowd economies. A collector raising funds from a traditional lender would just get cash, whereas through a platform like Maecenas they would also get the support of the crowd, many of which would actively and voluntarily engage in promoting the art piece they invested in.

EVB: How do you use the crowd?

MGC: We primarily use the crowd to provide finance to art collectors and galleries, but we have plans to create a community and foster engagement and participation.

EVB: How do you interact?

MGC: Mainly via online channel, which is an efficient way to connect with a global audience. We may organize meetups and other offline events in future.

EVB: How do you handle feedback?

MGC: Feedback is always valuable as it helps us tweak and tailor our platform to fit the needs of the crowd. Not all feedback can be acted on, sometimes you have to prioritise work due to time and resource constraints, but we like to have a healthy repository of ideas and improvements that we can implement.

EVB: How do you create the interaction?

MGC: A truly efficient platform must fully embrace technology and Maecenas is not the exception. We intend to stay true to this principle and engage with participants purely in a digital way.

EVB: What are the results?

MGC: The migration of brick-and-mortar to digital has started decades ago and still continues. Some industries have led the way while others have been followers. We’re already seeing evidence of some fairly large art investment deals closed purely online, some even through Instagram. The bulk of art investment is still conducted offline although we firmly believe this will rapidly change as soon as efficient digital platforms mature.

EVB: How do you measure results?

MGC: We’re still too young to have any robust measurable results but the prospects are very promising.

EVB: How do you measure the effect?

MGC: The crowd principles sit at the heart of our company, and a testament of that is the geographical distribution of our team. As a very young start-up, we already have team members in three continents and our office is mostly digital. We make strong use of online collaboration tools.

EVB: What Social  Media do you use?

MN: We are particularly active on twitter, and has helped us to establish a good dialog with other thought leaders.