Otis Wealth provides an easy-to-use mobile app that allows investors to acquire fractional shares in culturally significant assets. For as little as $25 per share, one can invest in KAWS artwork, Supreme collections, luxury watches, vintage comics, Hermes Birkin Bags, and more. The platform is backed by experienced investors including Union Square Ventures and Maveron, with its founder, Michael Karnjanaprakorn also having founded (and continuing to run) Skillshare, an online learning community.
Otis toes the line between fine art and collectibles, categories that have historically had little overlap. While the appraisal process for collectibles is typically conducted on the basis of condition, relative scarcity, and other measures linked directly to a tangible asset, fine art is highly ambiguous and values can vary widely across auctions. All of Otis’ predecessors have chosen one of the two, but not both, as Rally Rd leads the collectibles space and Masterworks leads the fine art market for ordinary investors. This element of the site’s offering allows it to list a diverse array of product offerings unlike anything available on other sites. While Masterworks will occasionally list high-end street art from KAWS or Banksy and Rally Rd frequently lists comics and memorabilia, these types of items constitute the core offering on Otis. The platform is also expanding into new categories this year, including digital assets like royalties for music and movies.
The unfortunate truth behind Otis’ value proposition is that its half-in, half-out focus on both fine art and collectibles has led to half-baked efforts in certain respects – efforts that fall short relative to competitors. Perhaps the two facets of its offering that best represent this failure are a relative lack of access to quality offerings and high fees. Collectibles sites like Rally and Mythic Markets have become attractive options for ordinary investors by using transparent, zero-fee investment models with minimum investments that rarely exceed $50. Otis has taken half of this model and lists items for minimums as low as $25 per share, but has paired this with sizable fees of up to 10% for sourcing items and 10% of profits upon the sale of any asset. On the other side of the site’s offering, Masterworks leads the fine art market with a mix of established and emerging artists for minimums as low as $500, pairing blue-chip names like Picasso with maturing names like Alex Katz and street artists like Banksy. While Otis offers items from Banksy and KAWS, it has, to date, listed significantly less valuable works by such artists. Whereas Masterworks has listed Mona Lisa by Banksy (worth $1M at listing time) and Far Away Friends from KAWS ($1.28M), Otis has offered Police Car by Banksy ($425K at listing) and Gone and Beyond ($325K). Furthermore, the absence of blue-chip artwork on Otis makes it challenging to diversify across different types of artwork.
For each offering on its platform, Otis provides high-quality videos, editorial content, and investment decks (which include historical returns, market information, fair market value figures, investment risks, and more). Unlike top competitors Rally Rd. and Masterworks, the platform does not include a secondary market, making an asset sale the only liquidity option for Otis investors. Although Otis hopes to have a secondary market in place by the end of 2020, there is no guarantee that regulatory approval will be obtained.
While Otis has a number of areas where it needs to improve or rethink its strategy, the site’s offerings fall within a broadly-defined space, what it terms “high-culture” assets, that has seen a marked improvement in attention and investment over the past two to three decades, with street artists like Banksy becoming household names and certain sneakers regularly fetching tens of thousands of dollars. The mixed nature of the platform’s listings make it difficult to fully diversify and high fees serve to meaningfully detract from net returns. However, the site may be an interesting supplemental source of investment opportunities for those already investing through Masterworks or Rally Rd. that are seeking additional exposure to specific “high-culture” asset categories. For retail investors without domain expertise in this space, or those simply focused on net returns, better options exist.