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Masterworks

Masterworks

Be an art collector—you don’t have to be a billionaire to invest in an Andy Warhol painting.

Verify Investor Status to make a reservation

Deal Type

Equity

Funding Goal

$1,815,000

Current Reservations

$2,000

Minimum Reservation

$500

Maximum Reservation

$100,000

Deal Stage

Other

Pre-money Valuation

$1,815,000

Open Date

03/13/2019

Closing Date

N/A

Elevator Pitch

For the first time ever, you can invest in a multi-million dollar painting by Andy Warhol with as little as $1,000.

Company Overview

Invest in art—the top-performing asset class of 2018 according to WSJ (12.31.18).

  • With Masterworks you can invest in artwork by “blue-chip” artists such as Andy Warhol
  • Since 2000, blue-chip artwork has outperformed the S&P 500 by over 250%, according to Artprice on February 2, 2018.
  • Andy Warhol was ranked 2nd on the Artprice100© index for 2018, which ranks “blue-chip” atists by sales weight.
  • 88% of wealth managers surveyed art and collectibles should be included as part of the wealth management offering, according to Deloitte‘s 2017 Art and Finance Report.
  • Since 1980, Art (0.11), Cash (0.08), and 10-Year US Treasury Notes (-.02) have had the lowest correlation with US financial markets, according to Citi‘s Financial Database in April, 2013.
  • You can now invest in 1 Colored Marilyn by Andy Warhol—of which similar paintings have a historical appreciation rate of 11.25%*—acquired by Masterworks at Phillips 20th Century & Contemporary Art Evening Sale in New York, on November 16, 2017.

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Invest in one of Andy Warhol’s most iconic and enduring images.

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Andy Warhol’s paintings of Marilyn Monroe can best be described as an icon of an icon, created by an icon. Warhol began to experiment with silkscreen printing in 1962—the same year of the Hollywood star’s untimely death—using a production still from the 1953 movie Niagara. The Reversals series was conceived on the suggestion of Warhol’s dealer Bruno Bischofberger, as a way to revisit of some of the most iconic images from his illustrious career.

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The first work from the Marilyn Reversal Series was sold at auction in 1990 for just $110,000, and works today continue to be in high demand selling for an all-time high of $2,405,000 at auction in 2014.

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Auction Results for the Marilyn Reversal Series (1979-1986)

1 Colored Marilyn (Reversal Series) is one of the 43 works from the Reversal Series to be sold at public auction since 1990 that have incredibly similar aesthetic properties and cultural significance, and can therefore, be thought of as close, albeit imperfect, substitutes (excludes works without color other than black, white or grey).

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About Andy Warhol

Andy Warhol was born in Pennsylvania on August 6, 1928. In 1945, he enrolled at the Carnegie Institute of Technology to pursue a degree in Pictorial Design. Upon graduating in 1949, Warhol moved to New York City to begin his career as an illustrator for magazines and books. A testament to his early success in advertising is the fact that Warhol’s work for the shoe company I. Miller began to appear weekly in the New York Times. Eventually, Warhol moved away from commercial work towards hand painting, and his signature, seemingly mass-produced images of every day, or popular, objects placed Warhol firmly within the Pop Art movement of the 1960s.

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In 1962, Warhol began to work primarily with photographic silkscreen printing, a technique intended for mass-production that would become most closely associated with his body work. Warhol appropriated photographs that he found in newspapers, media and pop culture. He drew on easily recognizable images to explore questions around consumer culture both in the form of everyday objects, such as the Campbell’s Soup Cans, and celebrity, especially figures mired in tragedy. Andy Warhol passed away unexpectedly in New York City on February 22, 1987.

About Masterworks

Founded in 2017 by Internet entrepreneur Scott Lynn, Masterworks is building what we believe to be the first investment platform for fine art—allowing investors to purchase and eventually trade interests (or shares) in a painting similar to the way investors purchase IPO shares in public companies. Here’s how we do it.

  1. WE EXPERTLY SELECT AND ACQUIRE WORKS: Our team selects paintings based on a review of sales data for similar works with historical appreciation rates between 9-15% and attempts to buy them below fair market value through auction guarantee strategies and established auction house relationships.
  2. WE TAKE IT PUBLIC: After we purchase a painting, we file it as a qualified security offering with the Securities and Exchange Commission.
  3. WE SELL SHARES TO INVESTORS: Once the offering is qualified by the SEC, investors will be able to buy shares for $20 per share.
  4. WE PLAN TO BUILD THE MEANS FOR INVESTORS TO TRADE SHARES: We seek to facilitate trading or sales through brokerage relationships, although we do not expect any such trading or brokerage relationships will be available within the next twelve-months. No assurance can be given that we will be able to establish a trading market for the shares.
* Set forth is the historical data for Andy Warhol's Marilyn Monroe Reversal Series sold at public auction from 1990 to 2017. Each of the considered works was created using the same technique between 1979 and 1986, with a singular image of Marilyn Monroe as the subject matter. We have included all works that feature at least one color, outside of the black negative of the image, and excluded those which lack color or hue, such as the Grey Marilyn or Black on Black Reversals, which we believe are not representative of the Painting. The data was sourced from publicly available auction records and does not include private sales. Such data may be incomplete or inaccurate. Although paintings in the Reversal Series have similar characteristics, each individual painting is unique in terms of artistic content, coloring, condition, provenance and other factors. We, therefore, cannot make any determination or representation that any of the data set forth below is useful in determining the value of the Painting and you are urged not to place undue reliance on such data.

An investor cannot invest directly in an index. Indexes are unmanaged. Indexes are used for comparative modeling purposes only. The timing of transactions in an investor’s account or other portfolio, advisory, and transaction fees, and other management activities can create significant differences between the performance of an index and an investment seeking similar or superior relative performance results.

Past performance is no guarantee of future results. An investor can lose money. Diversification and asset allocation do not ensure a profit or guarantee against loss. Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. Masterworks and Artprice, their affiliates and subsidiaries, are not affiliated in any way.

The information contained herein is provided for informational and discussion purposes only and is not, and may not be relied on in any manner as legal, tax, or investment advice, or as an offer to sell or a solicitation of an offer to buy an interest in any security.

An exempt offering of interests pursuant to Regulation A will only be made pursuant to the Offering Circular and subscription documents (“Offering Documents”), which will be furnished to qualified investors at their request for their consideration in connection with any such offering. The information contained in this short presentation will be qualified in its entirety by reference to the Offering Documents and other agreements and documents referred to therein, which contain additional information about the investment objective, terms, risks, and conditions of an investment in the investment vehicle. Nothing contained herein shall be deemed to be binding against, or to create any obligations or commitment on the part of, any potential investor, the offering sponsors, or the respective affiliates. No person has been authorized to give any information or make any representation or warranty regarding the subject matter hereof, either express or implied, and, if given or made in this short presentation, in other materials, or verbally, such information, representation, or warranty cannot and should not be relied upon, nor is any representation or warranty made as to the accuracy, content, suitability, or completeness of the information, analysis, or conclusions, or any information furnished in connection herewith contained in this presentation.

We are currently “testing the waters” under Regulation A of the Securities Act of 1933 for the Masterworks 001, LLC and Masterworks 002, LLC offerings currently filed with (but not yet qualified by) the Securities and Exchange Commission (“SEC”). This process allows companies to determine whether there may be interest in an eventual offering of their securities. We are not under any obligation to make an offering under Regulation A. We may choose to make an offering to some, but not all, of the people, who indicate an interest in investing, and that offering might not be made under Regulation A. If we go ahead with an offering, we will only be able to make sales after we have filed an offering statement with the SEC and the SEC has “qualified” the offering statement. The information in the offering statement will be more complete than any information provided on this web site, and could differ in important ways. You must consider fully the information provided in the Offering statement filed with (and qualified by) the SEC prior to making any investment decision.

The information contained on the Masterworks.io web site has been prepared by Masterworks without reference to any particular user’s investment requirements or financial situation. Potential investors are encouraged to consult with professional tax, legal, and financial advisors before making any investment into a Masterworks offering. All investments involve risk, including the risk of the loss of all of your invested capital. Please consider carefully the investment objectives, risks, transaction costs, and other expenses related to an investment prior to deciding to invest.

YOU MUST CAREFULLY REVIEW THE RELEVANT MASTERWORKS OFFERING CIRCULAR AND OFFERING STATEMENT BEFORE DECIDING TO INVEST.

Investment overviews on the Masterworks.io website contain summaries of the purpose and the principal business terms of the investment opportunities. Such summaries are intended for informational purposes only and do not purport to be complete, and each is qualified in its entirety by reference to the more detailed discussions contained in the respective Offering Circular filed with SEC or other offering materials relating to such investment opportunity.

No money or other consideration is being solicited at this time for any offering, and if sent in response, will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received by the issuer or anyone else until the Offering Statement filed by the company with the SEC has been qualified by the SEC. Any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of acceptance given after the date of qualification.

An indication of interest involves no obligation or commitment of any kind by either party. By using this website, you accept the Masterworks.io Terms of Use and Privacy Policy. Any person interested in investing in any Masterworks offering should review our disclosures and the most recent publicly filed offering statement relating to that offering, a copy of which will be available on this website (www.masterworks.io), or as available on the SEC’s EDGAR web site.

Masterworks is not registered, licensed, or supervised as a broker dealer or investment adviser by the SEC, the Financial Industry Regulatory Authority (FINRA), or any other financial regulatory authority or licensed to provide any financial advice or services. Neither FINRA, the SEC or any other regulatory organization endorses, indemnifies, or guarantees the business practices of SDDco Brokerage Advisors, LLC, selling methods, the shares or any offering referenced on this website.

Masterworks does not offer refunds after an investment has been made. Please review the relevant offering materials and subscription documentation for more information.

Masterworks.io, LLC is located at Spring Place, 6 St. Johns Lane, 7th Floor, New York, NY 10013

All securities transactions and broker dealer activities are currently offered through a partnership with SDDco Brokerage Advisors LLC MEMBER FINRA / SIPC (“SDDco-BA”). To check the background of SDDco and its representative, visit FINRA’s BrokerCheck.

SDDco Brokerage Advisors, LLC is located at 485 Madison Ave, 15th Floor, New York, NY 10022.

Masterworks.io and its affiliates are independent and unaffiliated with SDDco-BA. Any securities transactions or related activities offered by Masterworks.io associated persons are conducted in their capacities as registered representatives of SDDco-BA, or in their capacity as a “principal” to the transaction pursuant to SEC Rule 3a4-1.

This website contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “outlook,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, or state other forward-looking information. Our ability to predict future events, actions, plans or strategies is inherently uncertain and actual outcomes could differ materially from those set forth or anticipated in our forward-looking statements. You are cautioned not to place undue reliance on any of these forward-looking statements.

Traction

  • $10mm+ expressed interest in investing in fine art on our platform.

    January, 2019
  • 13,000+ interested investors registered on our platform.

    January, 2019
  • Masterworks platform launches to the public allowing accredited and non-accredited investors to learn about investing in fine art.

    May, 2018

Pitch Deck

Press Mentions

Frequently Asked Questions

What is the minimum investment?

For each offering, our minimum initial investment is $1,000 USD and our maximum investment is 20% of the total offering.

How and when do I receive a return on my investment?

There are two ways to make money on your investment: 1) Upon a sale of the painting. Our intention is to own each painting for a five to ten-year period, but it will be continuously offered for sale, and at any time, a collector can make an offer to buy a painting that you’ve invested in. As a shareholder, you can vote with others and decide whether to sell. If the painting is sold, your share of the net proceeds, if any, will be distributed to you (after the costs we disclose in our Offering Circular on file with the SEC). 2) In addition, we are seeking to establish brokerage relationships that will enable trading or sale of the shares similar to a publicly traded company, though we cannot assure you when or if such market will be available.

How does Masterworks choose which paintings to purchase?

Masterworks typically acquires ‘blue-chip’ artwork from the major auction houses, with acquisitions focused on artwork representative of a top 100 artist’s mature style, that it is able to acquire at an attractive cost relative to value based on estimated historical appreciation rates, and an established track record of multiple multi-million dollar sales annually.

How can I sell my shares on the secondary market?

Our planned trading platform will allow investors to track their investments with information including the current market share price, recent trading activity, and facilitate buy/sell orders for shares. We seek to facilitate trading or sales through brokerage relationships, although we do not expect any such trading or brokerage relationships will be available within the next twelve-months. No assurance can be given that we will be able to establish a trading market for the shares.

How are Masterworks investments structured?

Masterworks creates a Special Purpose Vehicle (Delaware LLC, taxed as a partnership) that contains only the painting—no other material assets, or debt—and files it with the United States SEC under Regulation A. Each Special Purpose Vehicle will sell ordinary shares to investors.

Where are the artworks stored?

Currently, the artworks are stored in a secure vault in Delaware. We plan to open up a Gallery in NYC in 2019 where the works will be on public display

What happens when a painting is sold?

Following a sale of the Painting, payment of all of such taxes and expenses, the Special Purpose Vehicle will be liquidated, and the remaining net proceeds, if there are any, will be distributed to the then holders of record of our shares in accordance with the priorities set forth in our operating agreement.

Can non accredited investors purchase shares?

Yes. This is open to both non accredited and accredited investors.

I am not a US citizen or resident - can I participate?

Yes. The offerings are available to both US and non-US citizens.

What are the fees associated?

Our fees are simple and fair. We charge a 1.5% annual management fee to cover distribution costs, regulatory expenses (filing and ongoing audit expense), storage and gallery space, insurance, and other expenses. Plus, we earn 20% of the profit if the painting increases in value.

How can I learn more about a particular offering?

We file documents with the SEC which can be obtained on www.sec.gov—you should carefully review the information contained in the offering document relating to a particular offering before investing.

What are the risks of investing in these offerings?

You should carefully review the information under the caption “Risk Factors” in the offering documents relating to a particular offering before investing. The offering documents for a particular offering can be obtained at www.sec.gov.

How can I learn more about the Offering?

We file documents with the SEC which can be obtained on www.sec.gov — you should carefully review the information contained in the offering document relating to a particular offering before investing.

Risks & Disclosures

The purchase of the Class A ordinary shares offered hereby involves a high degree of risk. Each prospective investor should consult his, her or its own counsel, accountant and other advisors as to legal, tax, business, financial, and related aspects of an investment in the securities offered hereby. Prospective investors should carefully consider the following specific risk factors, in addition to the other information set forth in this offering circular, before purchasing the securities offered hereby.

The Company is a new company and our business model is untested.

The Company is a new company that was formed on March 28, 2018 and had no operating history. We cannot make any assurance that our business model can be successful. Since inception, the scope of our operations has been limited to our formation. Our business model includes novel and unique features that are untested. Our operations will be dedicated to acquiring and maintaining the Painting and facilitating the ultimate sale of the Painting. We do not expect to generate any revenues or cash flow until the Painting is sold and no profits will be realized by our investors unless the Painting is sold for more than we acquired it for and there are sufficient funds after all applicable costs, expenses and taxes in order to effectuate a distribution to holders of our Class A ordinary shares upon our liquidation. We are not aware of another company that has successfully offered investors securities that represent indirect ownership of an interest in a single work of art. Similarly, there are few, if any, companies that have offered investors securities that represents indirect ownership in a single asset with the sole goal of realizing appreciation on the value of that asset. Accordingly, it is impossible to determine in advance how the Class A ordinary shares will trade relative to the underlying value of the Painting or if they will be able to trade at all. It is difficult to predict whether this business model will succeed or if there will ever be any value in the Class A ordinary shares.

We do not expect to generate any revenues.

Our business activities will be dedicated to maintaining the Painting and facilitating the ultimate sale of the Painting, which may not occur for many years. Our intention is to own the painting for a five- to ten-year period, although we may elect to hold the Painting for a longer period or sell the Painting at any time due to certain circumstances. We do not expect to generate any revenues or cash flow unless the Painting is sold and no profits can be realized by our investors unless the Painting is sold for more than we acquired it for and there are sufficient funds to effectuate a distribution after paying the applicable costs, taxes and expenses, or the investors sell their Class A ordinary shares on a trading platform approved by us or through brokerage relationships for more money than they acquired them for. Because we do not expect to generate any positive cash flow, we will be completely reliant on Masterworks to fund our operations. Investors should be prepared to hold their Class A ordinary shares for an indefinite period, as there can be no assurance that the Class A ordinary shares can ever be tradable or that the Painting can be sold for more than what we paid for it, or at all.

We are extremely undiversified as a company since our strategy is investing in a single piece of art.

Our Company was formed to acquire, maintain and potentially sell the Painting. We will not invest in any other artwork or assets. Such lack of diversification substantially increases market risks and the risk of loss associated with an investment in our Class A ordinary shares. A consequence of limiting our scope of operations to ownership of a single Painting is that the aggregate returns realized by investors are expected to correlate to the underlying value of the Painting.

We may sell the Painting at a loss or at a price that results in a liquidating distribution that is below the trading price of the Class A ordinary shares, or no liquidating distribution at all.

The Company will have the ability, in its sole and absolute discretion, to sell the Painting at a public auction and liquidate us if:

We become subject to the reporting requirements of the Exchange Act,

We settle or receive an adverse judgement in any material litigation, judicial proceeding or arbitration,
An active trading market fails to develop within twenty-four (24) months of the closing of the Offering, or thereafter such trading market ceases to exist or, the Administrator determines that such market ceases to have volume sufficient to permit reasonable trading of the Class A ordinary shares, or
The Administrator notifies us of its intent to withdraw.

Any such sale could be affected at an inopportune time, at a loss and or at a price that would result in a distribution of cash that is less than the trading price of our Class A ordinary shares or no liquidating distribution at all, and our investors could lose part or all of their investment in us. Investors should be prepared to hold their Class A ordinary shares for an indefinite period of time, as there can be no assurance that the Class A ordinary shares can ever be tradable or that the Painting can be sold for more than what we paid for it, or at all.

The timing and potential price of a sale of the Painting are impossible to predict, so investors need to be prepared to own the Class A ordinary shares for an uncertain or even indefinite period of time.

We intend to sell the Painting within a five- to ten-year time horizon, although we may elect to hold the Painting for a longer period due to market conditions or other circumstances. In addition, the occurrence of certain events, such as our inability or unwillingness to make the Class A ordinary shares available for trading on a trading platform approved by us, may compel us to sell the Painting at an earlier time. Accordingly, a risk of investing in the Class A ordinary shares is the unpredictability of the timing of a sale of the painting and the unpredictability of funds being available of a cash distribution and investors should be prepared for both the possibility they will not to receive a cash distribution for many years, if ever, and the contrary possibility that they may receive a liquidating cash distribution at any time following the completion of the Offering. Investors should be prepared to hold their Class A ordinary shares for an indefinite period of time, as there can be no assurance that the Class A ordinary shares can ever be tradable or that the Painting can be sold for more than what we paid for it, or at all.

Our structure may make it more difficult for us to sell the Painting at the highest possible price.

We have intentionally limited the manner in which we can sell the Painting without shareholder approval. Unless we obtain the prior approval of the then holders of our voting shares, our operating agreement, prohibits us from selling the Painting in a private (i.e. non-auction) sale. If the sale is initiated by the Company, we will execute the sale at a public auction conducted by Christie’s, Sotheby’s, Philips or another leading auction house. If we are approached by a potential purchaser, we will only execute the sale if such transaction is approved by the then holders of our voting shares. A significant percentage of transactions in fine art occur through privately negotiated transactions among art professionals and clients and many collectors and investors do not participate in public auctions. Similarly, collectors and investors may not be inclined to go through the trouble and cost to make an offer if there is a significant risk the shareholders will not approve such offer. Given the uniqueness of our model and the evolving character of the art market it is impossible to determine what effect, if any, these issues will have on our ability to eventually sell the Painting at the highest possible price. Further, there can be no assurance that the Painting can be sold at a profit or at all. The timing of the sale, and the potential value of the Painting will depend upon many factors beyond our control and investors in our Company should be prepared to lose all or part of their investment in our Company.

Our business model involves certain costs, some of which are to be paid for in Class A ordinary shares which will have a dilutive effect on the holders of our Class A ordinary shares.

There are various services required to administer our business and maintain the Painting. Pursuant to an administrative services agreement between us and the Administrator to be entered into prior to the completion of the Offering, the Administrator will manage all administrative services relating to our business and custodial services relating to the maintenance of the Painting. The Administrator will pay all ordinary and necessary costs and expenses associated with the administration of our business and maintenance of the Painting. In exchange for these services and incurring these costs, we will issue Class A ordinary shares to the Administrator at a rate of 1.5% of the total Shares outstanding (excluding Class B ordinary shares) per annum as consideration for such activities. Any extraordinary or non-routine services, if any, will be managed and paid for by the Administrator, but actual third-party costs associated with these extraordinary or non-routine services will be reimbursed upon the sale of the Painting or a sale of our Company, as applicable.

Because we do not expect to generate any positive cash flow, we will be completely reliant on the Administrator to fund our operations. The portion of the foregoing fees that are going to be paid in Class A ordinary shares will have a dilutive effect on the holders of our Class A ordinary shares and will effectively reduce the tangible book value per Class A ordinary share over time.

In the event we are able to sell the Painting, your potential investment returns will be lower than the actual appreciation in value of the Painting due to applicable costs, expenses and taxes to be paid.

In the event the Painting is sold, your distribution of cash proceeds will be reduced by costs, expenses and taxes. Sale prices reflected in action records, include the hammer price (i.e. the price at which the auctioneer declared the winning bid), plus the buyer’s premium and are reported net of applicable taxes, fees and royalties. Taxes, fees and royalties are typically paid by the purchaser. The amount of the published sale price a seller of a work receives is typically reduced by all or a portion of the buyer’s premium and there may also be a sales commission. These economic terms are negotiated between the seller and the auction house and vary widely depending on a number of factors, including the value and importance of the specific work, whether the work is sold as an individual piece or part of a larger transaction, anticipated demand levels and other factors. For a work similar to the Painting, it would be reasonable to expect that the net pre-tax cash proceeds to a seller in an auction sale would be in the range of 8% to 15% less than the published sale price, Accordingly, if for example, the Painting were to eventually sell at auction for a sale price of $3.0 million (hammer price, plus buyer’s premium), the net proceeds available to the Company as the Seller would be expected to be in the range of $2,760,000 to $2,550,000, however, the net result could fall outside of this range. The distribution to you upon dissolution of us following a sale will also be taxable to you depending on your tax basis in the Class A ordinary shares, the geographic area in which you reside and your local tax laws. Accordingly, your investment returns upon a sale of the Painting, if such a sale can occur and if such sale can generate sufficient funds for a distribution after accounting for applicable expenses and taxes, may be significantly lower than the actual rate of appreciation of the Painting.

There is no assurance of appreciation of the Painting or sufficient cash distributions resulting from the ultimate sale of the Painting.

There is no assurance that the Painting will appreciate, maintain its present value, or be sold at a profit. The marketability and value of the Painting will depend upon many factors beyond our control. There can be no assurance that there will be a ready market for the Painting, since investment in Painting is generally illiquid, nor is there any assurance that sufficient cash will be generated from the sale of the Painting to compensate members for their investment. Even if the Painting does appreciate in value, the rate of appreciation may be insufficient to cover our administrative costs and expenses.

For more information, please visit our filing at sec.gov.

Documents

Confidential

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