“This one piece changed the market.”
Zhang Xiaogang (b. 1958), Golden Memories, 40x22x9cm, gold in a rosewood box, 2007. ⓒ Art & Guide
At the headquarters of Yeolmae Company in Gangnam-gu, Seoul, CEO Kim Jae-wook pointed to the 24K gold artwork "Golden Memories" (by Zhang Xiaogang) on his desk. This product achieved a 160% oversubscription rate.
Just two years ago, the domestic art investment market had clear structural limitations. Investors had to wait three months for securities registration statements to be reviewed, and liquidation dates were uncertain. Art valuations were rudimentary, and the collateralized loan market was nonexistent. Galleries closed one after another due to a lack of liquidity.
Things are different now. Combined issuances have shortened the launch period, and a big data-based valuation system is in operation. Collateralized lending is providing liquidity to the art market. At the center of this change is Yeolmae Company, led by CEO Kim Jae-wook.
The Golden Formula Found in a Recession: Stability + Artistry
"With interest rates rising and the prolonged asset market slump, interest in investing in art has significantly decreased. With the art market slump extending to unprecedented lengths, returns on investment in art are bound to be slower than those in consumer goods like Korean beef."
CEO Kim Jae-wook honestly acknowledged the current situation. However, he found a solution.
"We launched a piece made of 24K pure gold, and it achieved a subscription rate of over 160%. I believed that artwork based on the stable material of gold could easily win over customers' hearts even in these times."
This product, which combines raw materials and art, simultaneously satisfies investors' preference for safe assets and their desire for artistic value.
"Every market has ups and downs. After a downturn, a boom comes again. Until then, we need to hold on and prepare better products."
Fruit Company plans to continue to expand its investment in sculptures by discovering works that combine raw materials with art. It is also preparing to issue a stablecoin based on raw materials like copper.
Armed with 2 million big data points, securing a stable income base through secured loans.
The core competitiveness of Fruit Company is data and technological prowess.
CEO Kim Jae-wook pointed to the monitor and began the demonstration. "We've collected up to 2 million domestic and international auction transaction data and completed the cleansing process. Each auction uses different data formats and languages, so cleansing is crucial."
What is noteworthy is that the function of reflecting the results of the work image analysis in the price has been commercialized.
"Our system delivers sophisticated results. Whether financial institutions are involved in art funds, collateralized loans, or STOs, we can provide everything from underlying asset valuations to market reports and artist reports."
Based on this technological prowess, the art-backed loan business "Yeolmae Art Loan" has established a stable revenue base. Next year, the company plans to expand its outstanding loans to 15 to 25 billion won.
"Our art market is severely lacking in liquidity. In developed countries, secured loan markets account for 40% of annual art transactions, but in Korea, there hasn't been a proper market."
The company offers the largest art collateral loan service in Korea, and is expanding its loan subsidiary's receivable balances directly while also providing collateral pricing and storage services to external companies.
We also improved the efficiency of issuing investment contract securities. By incorporating multiple projects into a single securities report using a "combined issuance" method, we saved time and money. In preparation for the upcoming legislation for STO (tokenized securities offerings), we established a system that utilizes both virtual account methods and Shinhan Investment & Securities' securities firm account methods.
A Blueprint for a 2026 IPO… "Completing the Art Finance Ecosystem"
CEO Kim Jae-wook has set a firm goal of an IPO in the first half of 2026.
"We plan to achieve profitability by identifying stable art investment products within investment contract securities, issuing stablecoins based on raw materials, expanding collateralized loans, providing valuation services, and expanding our IP business."
According to him, its subsidiary BuzzArt has already succeeded in turning a profit in 2023.
"Upbit NFT has introduced over 30 artists and sold over 100 original works and 1,000 editions as NFTs. We're also collaborating with Hyundai Department Store to sell a variety of art products, and we're expanding into fashion and interior design."
Early action was also effective. "Based on our analysis of the pricing system in the first quarter of 2022, we predicted that the art market downturn would accelerate starting in 2023. So, we liquidated a significant portion of our art inventory and launched a secured loan business using our own capital in January 2023."
Fruit Asset changed its name to Fruit Ventures. After obtaining accelerator status, it formed two groups and is investing in the cultural and arts industry, focusing on companies specializing in the arts.
"From art investment contracts and securities, to secured loans, operating a cultural arts accelerator, IP projects, and even a data-based valuation system… we've already established a solid foundation for the art finance business."
CEO Kim Jae-wook continued speaking with a confident voice.
"Once STO legislation and stablecoin issuance become a reality, we will expand our scale and collaborate with large corporations and financial institutions to offer a variety of products. In five years, we will become an art finance company that provides liquidity that can elevate the Korean art market to the level of advanced countries."
You must be logged in to post a comment.