5 Common Principles Between Art and Tech Ecosystems
I’ve spent 17 years in the tech sector, working with some of the world’s most innovative startups and prominent venture capital funds. And while I believe the field is still brimming with excitement, I also felt the need to explore a new avenue for my professional growth.
Based on this, I made the bold decision to launch Sensity Studio, a firm that helps brands engage with culture-sensitive audiences through the power of women’s art. Throughout this journey, I have had the opportunity to collaborate with several artists and galleries, and have immersed myself deeply in the art community by visiting studios and art fairs like Frieze in London, Art Basel in Basel, ARCO in Madrid, and Enter in Copenhagen. I attended a conference hosted by the Association of Women in the Arts (AWITA) in London and an event by The Cultivist. Additionally, I visited artist’s studios and thousands of exhibitions and complemented my learning by reading dozens of books.
The more familiar I’ve become with the art world, the more I realize that it operates similarly to the tech ecosystem. Here are some parallels I’ve discovered.
#1: Gatekeepers still matter, and they can increase a project’s odds of success
In the United States, almost one-third of all solo shows feature artists represented by five galleries, which are Gagosian Gallery, Pace, Marian Goodman Gallery, David Zwirner, and Hauser & Wirth. Being represented by one of these galleries has several advantages, one of them being that it gives artists a degree of presence in the world’s major art hubs, including New York, London, Hong Kong, and Paris. Also, because of their financial clout, they can afford to invest in their artists’ success. Most importantly, these gatekeepers have a solid reputation in the field, and their names boast the power to make or break careers.
This is no different than what happens in Silicon Valley. A startup that receives capital from Andreessen Horowitz or Sequoia Capital immediately gains a reputation of a potentially very successful company, because these funds have enormous resources to deploy in order to ensure its triumph. The same happens in earlier stages. Ventures that participate in accelerators like Y Combinator, which are uniquely positioned in the heart of the Bay Area innovation corridor, have a much higher rate of successful exits, since they can provide mentorship, access to capital, potential partners, and have a strong brand that helps them open door for their portfolio companies.
#2: “The Power Law” shapes the art investment world as much as venture capital
It is a well-known fact in venture capital that a sizable percentage of the returns will come from a few of their deals. As explained by seed-stage Warsaw-based VC fund Inovo, according to The Power Law, 97% of all exit profits come from less than 0.1% of startups. Therefore, most companies will either go bankrupt or generate modest returns.
As I found out, the same is true in art. A report by UBS and Art Basel revealed that numerous galleries receive as much as half their income from only one artist, and that for galleries operating in the primary market, their top three performers amounted to 63% of their sales. And even if many paintings or sculptures sell for thousands and even hundreds of millions, the reality is that for many artists, it is incredibly difficult to make a living.
#3: The gender gap is more than present
I’ve written before about how there is, still, a considerable gender gap in the venture capital system. In 2022, according to Pitchbook, companies founded solely by women garnered just 0.9% of the total capital invested in venture-backed startups in Europe.
The art scene has many parallels. According to The Guardian, female artists’ work is 10 times cheaper in comparison to that of their male counterparts. Also, the Maddox Gallery in London reported that the gender gap in art is worth $192 billion, and despite high-profile deals involving female artists like Yayoi Kusama, who has launched a very lucrative collaboration with Louis Vuitton, there is a lot of work to be done.
I must add that the gender gap is also about silenced voices. For example, in venture capital, women are underrepresented. As Sifted mentions, only 15% of GPs at European VC funds are female, and they only have access to 9% of the total assets under management. The fact that there are fewer female checkwriters places female founders at a disadvantage.
In art, the movie “Big Eyes” is a perfect example of how this happens. The film depicts the story of Margaret Keane, who, for years, painted in obscurity as her husband took credit for her paintings and introduced himself to the world as an art genius. To reduce the gender gap, we need to ensure that the Margaret Keane’s of the world can have a space to thrive, and are recognized for their talent.
#4: Online platforms are on the rise
In both the art and the startup worlds, technology is helping democratize access to capital and providing more opportunities. In tech, platforms like Seedrs and Uniborn allow companies to fundraise through equity crowdfunding, and AngelList even permits individuals to launch and manage their own VC fund. StartEngine, another platform in the field, has already enabled entrepreneurs to raise over $700 million.
In the same vein, Artsy, the world’s largest online art marketplace, conducted a survey in which 83% of respondents mentioned they had bought art online, and the number skyrocketed to 91% when it came to those dubbed as Next-Gen Collectors, given the increasing adoption of technology by younger generations. Additionally, the development of digital marketplaces helps emerging artists increase their discoverability, since most collectors frequently browse online looking for new art.
#5: Investment horizons are similar
Between the moment when an investment is made and the eventual exit, venture capital is an illiquid industry, and the same is true for art. Also, both require a considerable amount of money to get started. To invest in art, you can start from $250,000. However, as one esteemed art dealer told me, you need a minimum of $1 million to collect an initial attractive collection. While you might need substantially more for tech investments, the investment horizons and characteristics have many similarities.
The holding period for art pieces can range from 2 to 20 years, depending on how established the artist is. Limited edition works can sell at decent multiples a lot faster than pieces produced by young, emerging artists. On the other hand, on average, it can take between seven and ten years for a startup to reach the point where it is ready to be acquired or make a public listing. This is particularly true for early-stage startups.
Final thoughts
As you can see, there are many similarities in the way the tech and art ecosystems operate. Both tend to have high rewards for a small number of players, and still have a considerable number of gatekeepers dictating the rules. However, the increased penetration of online platforms is slowly helping democratize access to capital and opportunities, and balance the playing field. It is very important that, in both worlds, all stakeholders work together to maximize opportunities for talents regardless of their background, and that we close the gender gap that still keeps many gifted individuals marginalized.
