100 million dollar Austrian startup on the brink of collapse

An Australian state-of-the-art fintech that was deployed in more than 50 countries and had secured $100 million in debt funding has suspended operations indefinitely as it desperately tries to survive.

Over the weekend, Art Money notified customers in an email titled “Hardest News” that the business had taken the “difficult decision” to “pause business operations.”

The company’s founder and CEO, Sydney-born Paul Becker, said he was looking to “recapitalize” the fintech and needed another $5 million (A$7.6 million) to start turning a profit.

“The business I founded, Art Money, has run out of operating capital and I have let down many people who believed in it and me,” he wrote.

Art Money operated similarly to a buy-now-pay-later app, but specifically for the art world, where its customers could use the lending facility to help them buy a piece of art ranging from $500 to to 1 million dollars.

Mr Becker said the indefinite closure meant new customers could not apply for finance and existing customers could no longer shop.

“At least for now,” he added.

He also said that all galleries, artists and art dealers have been paid or will be paid soon

Similar to Afterpay, Art Money customers pay for artwork in 10 monthly installments, interest-free.

And like other buy-now-pay-later services, part of its business model saw Art Money pay sellers before they themselves received any money from the customer.

Art Money was launched a decade ago and has since managed to partner with more than 2,000 art galleries worldwide.

Its website claims that more than 20,000 works of art have been purchased thanks to its existence.

Art Money has an Australian credit license and had secured $100 million in debt financing.

According to ASIC, it has a registered head office in Chippendale, Sydney.

In addition to attracting attention from international galleries, Art Money had also facilitated more than 1,000 purchases from renowned fine art auction houses, including Christie’s and Sotheby’s.

In fact, Christie’s was one of 135 investors who had invested $10 million in the business.

In an interview with The Australian Financial Review from last year, the founder, Mr.

Becker said in the same interview that the highest purchase ever made through Art Money was for a painting in the US that sold for more than $500,000.

Unfortunately, amid the economic downturn that has affected companies, Art Money has hit a critical juncture.

“Founders really only have 3 jobs,” wrote Mr. Becker. “Set and communicate the vision. Build a great team. Don’t run out of money. After 10 years … I haven’t landed job #3.”

The lack of new funding meant he was unable to continue paying the bills for the “operational side of the business”, which includes salaries, technology and regulatory considerations.

Mr. Becker went on to say that they were very close to becoming a profitable entity.

“Like any business that is pre-profit, including most startups and early-stage companies, investor funding is required to bridge the gap to profitability whether you’re Uber or Amazon or Art Money,” he wrote. “We’re about 18 months away from that.”

It comes as a number of other operators now acquired later have also succumbed to difficult market conditions.

In February this year, Australian ASX-listed company OpenPay became the first BNPL utility to fail owing more than $66.1 million to creditors, $4.1 million in unpaid vacation and wages to employees, and with just $1.2 million remaining as money in the bank, according to reports.

OpenPay had not made a single profit since its stock market debut.

In 2022, Afterpay reported a loss of $345 million. Afterpay accrued $176.7 million in bad debt acquisition losses.

Last year, in June, Zip hit monthly profit in Australia, US and NZ for the first time ever.

Zip Co narrowed its net loss to $413 million for the year to June 30, from $1.1 billion a year earlier.

alex.turner-cohen@news.com.au

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