Christie’s Venture will focus on early-stage financing for companies developing Web 3.0 and related technologies, innovations that make it easier to consume art.
2 min
Christie’s announced on Monday that it’s now investing in leading-edge technology related to the future of the art market through an internal strategic venture fund.
Christie’s Venture will focus on early-stage financing for companies developing Web 3.0 and related technologies, innovations that make it easier to consume art—including digital art, and on financial technologies that make it easier to buy and sell art.
“We’re particularly interested in founders who are doing things that reduce friction in our space—whether it be buying and selling, provenance, security, or technologies that help people consume art better,” says Devang Thakkar, global head of Christie’s Ventures. “Those are the kinds of areas that we’ve identified where we can help move the needle.”
Thakkar began advising Christie’s CEO Guillame Cerutti and the executive team during the pandemic on a range of digital considerations, including web and mobile applications, trends in nonfungible tokens, or NFTs, and digital ownership.
“With the growth of that area last year, we had a front-row seat to the development and innovation that founders were bringing to us,” he says. At the time, Christie’s didn’t have a way to participate in these fledgling businesses, so Thakkar pitched the idea of a venture fund.
The vehicle’s first investment is in LayerZero Labs, which Christie’s describes as a “cross-chain interoperability company.” In other words, LayerZero is developing technology that will allow people to move assets between blockchains such as Ethereum, Solana, and Algorand.
There are more than 1,000 blockchains currently in existence and Christie’s expects consolidation in the sector will reduce the number to 20 to 30 within the next year-and-a-half. LayerZero should make it easier for individuals to move their holdings without going through several steps and paying lots of fees. It’s technology that should benefit any crypto holder, not just those who own NFT-based art, Thakkar says.
Aside from such Web 3.0 technologies, Christie’s will also invest in technology that makes it easy to consume art, whether it’s through today’s computer systems, advanced screens, or something else, he says, adding, “It’s an area of investigation for us.”
Concerning financial innovation, Christie’s, which has its own art financing division, is looking outside of traditional art lending to the selling of fractionalized shares in fine art and other innovations that make it easier to sell art.
The fund is launching at a time when cryptocurrencies have fallen sharply, taking the value of many NFTs down too. Ethereum, which is the basis for many NFTs, was down nearly 66% through Friday.
But Thakkar says this “crypto winter” actually makes it “a little more realistic to invest in this space—the fog of speculation and high-price points have tapered down a bit.” He points to Andreessen Horowitz, a US$33 billion California-based venture firm that began investing in leading-edge tech in 2009, in the midst of the financial crisis.
Christie’s Ventures is seeded from the auction house’s balance sheet and will not include other investors. Legal and financial due diligence will all be handled in house, too.
Thakkar, who has been investing in companies on his own for 10 years, worked at Microsoft for a decade and was a former executive at Artsy, and he says, he also grew up around art. This new role at Christie’s is “a perfect blend of every fabric of my being,” he says.
Reprinted by permission of Penta. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: July 18, 2022
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Selloff in bitcoin and other digital tokens hits crypto-treasury companies.
3 min
The hottest crypto trade has turned cold. Some investors are saying “told you so,” while others are doubling down.
It was the move to make for much of the year: Sell shares or borrow money, then plough the cash into bitcoin, ether and other cryptocurrencies. Investors bid up shares of these “crypto-treasury” companies, seeing them as a way to turbocharge wagers on the volatile crypto market.
Michael Saylor pioneered the move in 2020 when he transformed a tiny software company, then called MicroStrategy , into a bitcoin whale now known as Strategy. But with bitcoin and ether prices now tumbling, so are shares in Strategy and its copycats. Strategy was worth around $128 billion at its peak in July; it is now worth about $70 billion.
The selloff is hitting big-name investors, including Peter Thiel, the famed venture capitalist who has backed multiple crypto-treasury companies, as well as individuals who followed evangelists into these stocks.
Saylor, for his part, has remained characteristically bullish, taking to social media to declare that bitcoin is on sale. Sceptics have been anticipating the pullback, given that crypto treasuries often trade at a premium to the underlying value of the tokens they hold.
“The whole concept makes no sense to me. You are just paying $2 for a one-dollar bill,” said Brent Donnelly, president of Spectra Markets. “Eventually those premiums will compress.”
When they first appeared, crypto-treasury companies also gave institutional investors who previously couldn’t easily access crypto a way to invest. Crypto exchange-traded funds that became available over the past two years now offer the same solution.
BitMine Immersion Technologies , a big ether-treasury company backed by Thiel and run by veteran Wall Street strategist Tom Lee , is down more than 30% over the past month.
ETHZilla , which transformed itself from a biotech company to an ether treasury and counts Thiel as an investor, is down 23% in a month.
Crypto prices rallied for much of the year, driven by the crypto-friendly Trump administration. The frenzy around crypto treasuries further boosted token prices. But the bullish run abruptly ended on Oct. 10, when President Trump’s surprise tariff announcement against China triggered a selloff.
A record-long government shutdown and uncertainty surrounding Federal Reserve monetary policy also have weighed on prices.
Bitcoin prices have fallen 15% in the past month. Strategy is off 26% over that same period, while Matthew Tuttle’s related ETF—MSTU—which aims for a return that is twice that of Strategy, has fallen 50%.
“Digital asset treasury companies are basically leveraged crypto assets, so when crypto falls, they will fall more,” Tuttle said. “Bitcoin has shown that it’s not going anywhere and that you get rewarded for buying the dips.”
At least one big-name investor is adjusting his portfolio after the tumble of these shares. Jim Chanos , who closed his hedge funds in 2023 but still trades his own money and advises clients, had been shorting Strategy and buying bitcoin, arguing that it made little sense for investors to pay up for Saylor’s company when they can buy bitcoin on their own. On Friday, he told clients it was time to unwind that trade.
Crypto-treasury stocks remain overpriced, he said in an interview on Sunday, partly because their shares retain a higher value than the crypto these companies hold, but the levels are no longer exorbitant. “The thesis has largely played out,” he wrote to clients.
Many of the companies that raised cash to buy cryptocurrencies are unlikely to face short-term crises as long as their crypto holdings retain value. Some have raised so much money that they are still sitting on a lot of cash they can use to buy crypto at lower prices or even acquire rivals.
But companies facing losses will find it challenging to sell new shares to buy more cryptocurrencies, analysts say, potentially putting pressure on crypto prices while raising questions about the business models of these companies.
“A lot of them are stuck,” said Matt Cole, the chief executive officer of Strive, a bitcoin-treasury company. Strive raised money earlier this year to buy bitcoin at an average price more than 10% above its current level.
Strive’s shares have tumbled 28% in the past month. He said Strive is well-positioned to “ride out the volatility” because it recently raised money with preferred shares instead of debt.
Cole Grinde, a 29-year-old investor in Seattle, purchased about $100,000 worth of BitMine at about $45 a share when it started stockpiling ether earlier this year. He has lost about $10,000 on the investment so far.
Nonetheless, Grinde, a beverage-industry salesman, says he’s increasing his stake. He sells BitMine options to help offset losses. He attributes his conviction in the company to the growing popularity of the Ethereum blockchain—the network that issues the ether token—and Lee’s influence.
“I think his network and his pizzazz have helped the stock skyrocket since he took over,” he said of Lee, who spent 15 years at JPMorgan Chase, is a managing partner at Fundstrat Global Advisors and a frequent business-television commentator.
