Art Money on brink of collapse as $100m Aussie fintech pauses operations

Australia’s art fintech, which has been used in more than 50 countries and secured $100 million in debt funding, has suspended operations indefinitely as it struggles desperately to survive.

Art Money told customers in an email titled ‘The Hardest News’ over the weekend that the company had taken the “difficult decision” to “temporarily cease operations”.

The company’s founder and CEO, Sydney-born Paul Becker, said it was looking to “recapitalize” the fintech and needed an additional US$5 million (A$7.6 million) to start turning a profit.

“The Art Money company I started ran out of capital and I disappointed a lot of people who believed in it and me,” he wrote.

Art Money worked much like a buy-now-pay-later app, but specifically for the art world, where customers could use a loan option to help purchase artwork ranging from $500 to $1 million.

Mr Becker said the indefinite closure meant new customers would not be able to apply for finance and existing customers would no longer be able to shop.

“At least for now,” he added.

He also said that all galleries, artists and art dealers have been paid or will be soon

Similar to Afterpay, Art Money customers paid for artwork in 10 interest-free monthly installments.

And like other buy-now-pay-later services, part of its business model Art Money paid sellers before they themselves received money from the customer.

Art Money started a decade ago and has since managed to work with over 2,000 art galleries worldwide.

Its website claims that more than 20,000 works of art have been purchased because of its existence.

Art Money has an Australian credit license and has secured $100 million in debt financing.

According to ASIC, it has its registered office in Chippendale, Sydney.

In addition to attracting the attention of international galleries, Art Money has also enabled more than 1,000 purchases from well-known fine art auction houses, including Christie’s and Sotheby’s.

Christie’s was actually one of 135 investors who put $10 million into the deal.

In an interview with The Australian Financial Review from last year, the founder, Mr. Becker said Art Money had achieved $56 million ($83 million) in art sales, about 60 percent of which came from Australia.

Mr. Becker said in the same interview that the largest purchase to date through Art Money was for a painting in the United States, which sold for more than $500,000.

Unfortunately, Art Money has reached a tipping point due to the economic crisis that has hit businesses.

“Founders really only have 3 jobs,” Mr. Becker wrote. “Set and communicate a vision. Build a great team. Don’t run out of money. After 10 years…I didn’t do job no. 3.”

The lack of new funding meant it was unable to pay the bills for the “operational side of the business”, which includes payroll, technology and regulatory aspects.

Mr. Becker went on to say that they were so close to becoming a profitable entity.

“Like any business that is pre-profitable, including most start-ups and early-stage companies, funding from investors is needed to bridge the gap to profitability, whether you’re Uber or Amazon or Art Money,” he wrote . “We’re about 18 months away from that.”

This is due to the fact that many other buy now operators have also succumbed to the difficult market conditions.

In February this year, Australia’s ASX-listed OpenPay became the first BNPL service to collapse owing more than $66.1 million to creditors, $4.1 million in unpaid holiday and employee wages and just $1.2 million in cash at the bank, according to the report data.

OpenPay has not made any profit since its listing.

In 2022, Afterpay reported a loss of $345 million. Afterpay attributed a $176.7 million loss to the assumption of bad debts.

Last year, in June, Zip achieved monthly returns for the first time in Australia, the US and New Zealand.

Zip Co narrowed its statutory net loss to $413 million for the year to June 30, down from a staggering $1.1 billion a year earlier.

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