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

An Australian fintech, used in more than 50 countries and which had secured $100 million in debt funding, has suspended its operations indefinitely as it desperately fights to survive.

Over the weekend, Art Money announced to customers in an email titled “The Hardest News” that the company has made the “difficult decision” to “suspend business operations.”

The company’s founder and CEO, Sydney-born Paul Becker, said he was looking to “recapitalize” the fintech and needed another $5 million (S$7.6 million) to start building a profit.

“The company I founded, Art Money, ran out of operating capital and I disappointed many people who believed in it and me,” he wrote.

Art Money worked similarly to a buy now pay later application, but specifically for the art world, where its customers could use the loan facility to help them purchase a work of art ranging from $500 up to $1 million.

Becker said the indefinite closure will mean new customers will not be able to apply for financing and existing customers will no longer be able to make purchases.

“At least for now,” he added.

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

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

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

Art Money was launched ten years ago and has since managed to partner with over 2000 art galleries around the world.

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

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

According to ASIC, it is registered in Chippendale, Sydney.

As well as attracting the attention of international galleries, Art Money has also facilitated more than 1,000 purchases from renowned art auction houses, including Christie’s and Sotheby’s.

In fact, Christie’s was one of 135 investors who had put $10 million into the business.

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

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

Unfortunately, in the context of the economic crisis affecting companies, Art Money has reached a critical point.

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

The lack of new funding meant it was unable to continue paying the bills for the “operational side of the business,” which includes salaries, technology and regulatory considerations.

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

“Like any pre-profitable business, including most startups and early-stage companies, investor funds are needed to close the gap to profitability, whether you’re Uber, Amazon or Art Money “, he wrote. “We’re about 18 months away from that.”

This is because other “buy now later” operators have also succumbed to the difficult market conditions.

In February this year, ASX-listed Australian firm OpenPay became the first BNPL service to collapse, owing more than $66.1 million to creditors, $4.1 million in holiday pay and lost wages paid to employees and with only $1.2 million left in cash in the bank, according to reports.

OpenPay has not made any profits since its stock market debut.

In 2022, Afterpay reported it suffered a loss of $345 million. Payroll racked up losses of $176.7 million from taking on bad debt.

Last year in June, Zip achieved monthly profitability for the first time ever 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.

alex.turner-cohen@news.com.au

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