Ever dreamt of flaunting a Picasso, cruising in an exotic car, or donning a rare diamond? Imagine doing all that, even if your budget begs to differ!
Donnalynn Patakos, Editor-in-Chief of Portray, interviewed Alan Snyder, Founder and CEO of aShareX, about how you can!
What is aShareX?
aShareX stands as a cutting-edge auction exchange committed to democratizing ownership of high-value assets. It achieves this by enabling fractional ownership and trading of various assets such as artworks, collectibles, gems, automobiles, and more. Functioning as the driving force behind fractional auctions for auction houses, galleries, and private collectors, aShareX is dedicated to broadening access to the fine art and luxury market. By providing art enthusiasts and investors with easy entry, reduced ownership costs, and control over liquidity, aShareX opens up new possibilities in the world of art investment.
How aShareX is Revolutionizing Fine Art Investing: A Transparent Approach to Fractional Ownership
The concept of fractional ownership in the art world has created an extraordinary opportunity for prospective investors to engage in a market historically reserved for the elite. aShareX, an innovative online platform, is leading this transformation by allowing individuals to purchase shares in fine art and collectibles, making these exclusive asset classes accessible to a broader audience.
Market-based pricing
Alan Snyder shared, “It is a full-on trading system. Let’s let the marketplace decide the value. Fractional bidders compete against other fractional bidders and 100% bidders to get an accurate market-based price. And it works! We held our first auction last November.
Through our research we discovered that people who bid in major auctions are uncomfortable. They cannot test drive how to participate in an auction, but they can practice here. We give them that ability. You can sign up and bid in a simulated auction to test it out, and every time you do it, the results are different, making you more confident and ready to invest confidently.”
He further explains, “You can bid as a 100% owner or choose fractional ownership. Let’s say the fractional bidders win; they receive an SEC-qualified security to prove ownership—common stock. aShareX will also create a secondary market to provide liquidity for those shares.
We connected to fourteen service providers to make our system work. We run KYC and anti-money laundering checks, employ two broker-dealers, and have an independent cash custodian, and we provide comfort.”
Understanding aShareX
aShareX is a digital auction platform that facilitates both fractional and full ownership of artworks and collectibles. The platform’s mission is to democratize fine art and collectibles ownership, enabling a diverse range of investors to participate. Individuals, businesses, trusts, pension funds, foundations, and endowments can partake in aShareX auctions. There are no minimum wealth or income requirements to invest.
How It Works: Fractional Ownership
aShareX introduces a novel approach to art investing through fractional ownership. Participants can bid for fractional or 100% ownership of artworks in live auctions. Fractional bidders can bid up to the valuation of their choice, with bids aggregated in real-time until they meet the auctioneer’s asking price. Winning fractional bidders receive registered securities through an SEC-qualified offering, representing their ownership interests. The insured, maintained, and stored assets are secured in a professional facility.
Empowering Investors
The platform’s philosophy revolves around solving the flaws of traditional alternative assets, emphasizing true market pricing and investor control over exits. With aShareX, individuals no longer need millions to own a Picasso, a 40-carat orange diamond, an exotic car, or a Mickey Mantle rookie card.
Why Invest in Alternative Assets
aShareX highlights the advantages of investing in alternative assets, emphasizing portfolio diversification, low correlation to equities and bonds, and the durable value of these assets.
Current alternative structures leave much to be desired. Most structures give little control to the investor, and many of the fees are dramatic and significantly lower your return. Synder adds, “About three years ago, we decided there has to be a better way.”
The Dynamics of Fractional Ownership
aShareX’s distinctiveness lies in allowing buyers to acquire shares in high-value artworks in an auction that would otherwise be financially out of reach. The number of shares a fractional bidder receives corresponds to their winning fractional bid amount as a percentage of the total artwork sale price.
Full Ownership Process
For those seeking full ownership, aShareX’s process aligns with traditional art auctions. After winning an auction, full bidders gain outright physical ownership of the artwork, only paying traditional auction fees.
Post-Auction Handling
When an artwork is fractionalized, winning fractional bidders receive shares representing their interests in a Delaware LLC. The artwork is insured and stored in a secure facility or museum.
“DP- What will you do for the value of the art along the way?
AS- Another hat I wear is a lender against museum quality pieces; we will be delighted to take the art and put it in exhibitions, promotions, and increase visibility to the artist. We have done it, and we expect to do it here.
Photo Courtesy of aShareX
Benefits of aShareX
DP- What are the Benefits of Using aShareX?
AS- “If money managers buy a Picasso, they mark it up for the investor by 11%, charge 1.5% management fees per year that they hold the art, and also take 20% of the profit.
We auction the art and charge a one-time 6% fee to the fractional winners. There are no annual fees. The one-time fee pays for the storage, insurance, annual audits and appraisals.
Due Diligence for Informed Decisions:
Teaming up with auction house partners, aShareX conducts lending-grade due diligence on all artworks. This includes estimated values, condition reports, provenance, exhibition and publication histories, and a catalogue raisonné.
Investor Control and Decision-Making:
Investors can monitor the performance of their portfolio through annual assessments of the fractionalized artworks. Moreover, the decision to sell such artworks lies with the shareholders. A vote is automatically called and initiated during the 6th and 7th years of ownership. If not sold previously, the art will be sold in the 8th year. Additionally, shareholders can decide whether they would like an early vote, if there is a compelling offer on the table.
Notably, aShareX held their first auction in conjunction with Bonhams and aims to collaborate with auction houses again for future auctions.
Secondary Market and Global Participation:
aShareX will host a secondary market where sellers list shares for sale, offering fractional investors potential liquidity. Fractional bidders from around the world can participate in aShareX auctions.
Snyder remarks, “Selling shares on the secondary market has a tax advantage. Collectibles have a capital gains tax rate of 28%. However, if I sell my shares, they can be subject to a more favorable tax rate of 20%. The secondary market will be run through the aShareX website..”
Innovative Solutions for Inherited Assets
What caught my attention is the inheritance scenario where, for instance, two of three heirs want to sell. If one wishes to retain ownership, they have the option to place the inherited item up for auction. This way, the two heirs opting to sell can receive the proceeds, and the third heir choosing to keep it would retain a percentage, becoming one of the fractional owners. This arrangement ensures that the investment remains actively traded, offering a unique solution in situations of shared ownership.
In conclusion, aShareX emerges as a platform that breaks down barriers in fine art and collectible investing. By embracing fractional ownership, competitive pricing, and providing comprehensive information to prospective investors, aShareX creates an accessible and transparent method for engaging in high-value investments.
Auction Details
March 21, at 5pm Pacific in Los Angeles., aShareX is joining forces with Inversion Art to promote and sell captivating works of art directly from the studios of select artists. This unique event allows art enthusiasts to immerse themselves in the creative world and participate in the auction action. Through aShareX’s platform, you can vie to become a fractional owner or secure full ownership of these remarkable artworks. To explore the diverse array of artists and their creations, you can visit the website to join the collective ownership experience and become a fraction of the faction!
