For art lovers looking to bid on an Andy Warhol painting, as well as pieces from some lesser-known artists, the team at Paddle8 will soon scale up its digital auction, thanks to new funding.
The New York-based marketplace for art and collectibles announced Wednesday it raised $34 million in a Series C round. The funding round’s backers—who come from the arts and tech world—include Edgar Berger, chairman and CEO of international at Sony Music Entertainment; Eric Fellner, co-chairman of Working Title Films; famed art dealer David Zwirner; and luxury investment firm Mousse Partners.
The startup’s website and mobile app let users bid on pieces of fine art, furniture, vintage accessories, movie memorabilia, and other collectibles.
Co-founder Osman Khan says Paddle8 wants to fill the space between eBay and Sotheby’s, for collectibles that may sell between $500 and $25,000. At those prices, he says, larger auction houses will not likely take on such items for bidding, unless they are included in a collection that features a stellar, marquee piece that can fetch a mint.
Regional auction houses are an option, Khan says, though they typically require the seller to pay to ship the items, as well as fork over a 25 percent commission—if it sells. “If it doesn’t, the piece is technically deemed ‘burned’ and you can’t resell it anywhere else for at least two years,” he says.
Traditional auction houses might also take a 20 to 25 percent commission from the buyer once a deal is done.
Paddle8 takes a a smaller slice, Khan says, by comparison: an 8 percent commission from the seller and a 15 percent cut from the buyer. The company drop-ships items only if they are sold, in order to avoid taking on inventory. If the piece does not sell, Paddle8 does not share its records publicly, which allows the seller to try again elsewhere.
The new funding, Khan says, will go towards technology investments and new hires, particularly in engineering. Paddle8 already works with some 50,000 collectors across 90 countries, and plans to invest in further expanding its reach domestically and in Europe. The company is also looking at ways it might break into Asia, either alone or with a partner. “The auction market is really robust in China,” Khan says.
The arts have been trickling onto the canvas of startups in New York with the likes of Arthena, which offers an equity crowdfunding plan for collections of art, and Artful.ly, a business management platform for the arts.
Founded in 2011, Paddle8 has so far raised $44 million in total funding. Khan says he and co-founder Aditya Julka met during their time at Harvard Business School.
After relocating to New York, Julka wanted to buy art but knew little about where to start. Khan put him in touch with Alexander Gilkes, an art auctioneer, who would also become a co-founder of the company. Paddle8 is positioning itself as an online way for novices to get their feet wet buying collectibles, as well as give sellers a way to turn hidden treasures that may be sitting on their shelves into a bit of cash. “We all have stuff in our attics; we all have things we’ve collected over time, but didn’t know how to access the auction market,” Khan says.
