3 min read

Divide and conquer

Collectors come from all walks of life, yet the rarest and most iconic items are often unobtainable for the vast majority of us. Does this matter and how does fractionalisation impact this dynamic?
Divide and conquer

Is collecting accessible?

Collectables have been part of the fabric of society for thousands of years, traced back to Mesopotamian Royalty some 5000 years ago.   Art collection is comparatively much younger, although still gains prominence as far back as the 15th Century courtesy of the Medici dynasty of Florence.  For most of history, only the social elite have had the means to build and maintain extravagant collections, epitomised by The British Royal Family.  Widely accepted to be the most valuable collection on the planet, it was initiated by Henry VII during the late 13th Century, subsequently augmented by over 30 members of the royal family.

The extensive collection contains around 7,000 paintings, 500,000 prints, 30,000 watercolours and drawings, photography, ceramics, sculptures, manuscripts and of course the Crown Jewels!  In total the collection is reportedly worth $13.3bn - to put that in perspective, even if you saved $1,000 per day, it would take you over 36,000 years to save enough to make them an offer! (By which time the price will have increased many times and you will be back to square one)

Motivations for collections

From  Napoleon Bonaparte’s Egyptian obsession to Nicole Kidman and her rumoured fascination with ancient coins, trillions of dollars have been spent on the acquisition of unique items and entire collections, in fact the annual global market for Collectables is estimated to be worth a jaw dropping  $370bn-$450bn according to TechCrunch.

Reasons for collecting are myriad, from economic benefits to reliving childhood moments.  Some collectors like Seth Rogen will shout from the rooftops about Pokemon cards to virtue signal causing astonishing spikes in valuations (more on that another time) whilst others are more private such as Freud’s collection of ancient artefacts or Maria Sharapova’s secret love of philately (stamp collecting).

It's even theorised that there is a ‘collectors’ gene, driving those in its possession to acquire and complete collections at all costs!   Unfortunately, with high demand and often by definition limited supply, this can drive valuations far beyond the reach of 99.9% of people. This in turn excludes most of us from the benefits of ownership, be it personal or economic.

What is Fractionalisation?

“Apple wouldn’t be worth $3 trillion if it was one share, nobody could afford it”
Chopped apple

This is where fractionalisation comes in, a modern digitised solution to an established problem.   Fractionalisation is a relatively new concept in the Collectables and Art market, but long established in more traditional financial arenas.  For example, in property modern shared ownership schemes involve the buyer, mortgage provider and developer or government combining forces to get first time buyers on the ladder, the person living in the property may own as little as 25% but still enjoys the benefits of ownership; a roof, walls and pro-rata economic benefits .

So too in the investment world, where company ownership is split into shares, available to trade on the open market.  Splitting into shares or ‘fractions’ also has the ability to increase demand for the underlying asset/business by making it accessible to more individuals.  As Dan Carter, founder of Showpiece analogises, “Apple wouldn’t be worth $3tn if it was one share, nobody could afford it”.

Forbes suggest that a similar model applied to the Collectables space grants access to a much wider audience, thus driving the value of the underlying item.  

“I want to display it in my home, I want to talk about it with friends and family.  I’m proud of my collection and I love things that spark conversation” - Showpiece Founding member

Fractionalisation and collectables

You’ve probably read articles about the wealthy diversifying portfolios with alternative assets but Fractional Ownership of collectables is so much more than economic benefit and we know this from talking in detail to our Showpiece ‘Founding Member Club’.  

Of course economic benefit is a consideration and the ability to buy and sell on secondary market places facilitates that, but for many the thrill of collecting, instant access to a world of treasures previously unobtainable is a driving factor.  A burgeoning community of like minded individuals, keen to engage in discussions not only about specific ‘things’ but about the provenance, the owners, the ‘why’ and ‘how’ because after all, what is collecting about if not the Story?

Find out how Showpiece is taking this on board and building a platform with collectors at it’s heart here.