Despite NFT Downturn, Christie’s Just Launched a VC Fund to Improve Technology in the Arts

Continuing its foray into digital art, Christie’s Auction House launched its own venture capital firm July 18. Called Christie’s Ventures, it will fund emerging and financial technology companies relevant to the art market, according to a press release from the auction house. The firm has already invested in LayerZero labs, a startup focused on easing the movement of assets across blockchains.

This announcement comes as both Christie’s and its rival, Sotheby’s, reported high sale numbers for first half of the year. Christie’s has sold $4.1 billion this year, a 17% increase from the same period last year, while Sotheby’s sales of $746 million show a 37% increase.

Despite Christie’s impressive overall sales, it saw a downturn in the sale of non-fungible tokens (NFTs), with $5 million in sales in the first half of this year compared to $93.2 million in the first half of 2021. The auction house also recently lost its NFT expert Noah Davis, who departed from Christie’s in June after helping usher in the art world’s NFT boom and spearheading the historic March 2021 sale of a $69 million NFT by the artist Beeple.

“What has happened in the last three to four months is a normalization. There was lots of speculation last year, prices were skyrocketing,” said Devang Thakkar, the global head of Christie’s Ventures, in an interview with the Observer. “The fog has lifted and helped people focus on what is the right technology for this space, not who is going to make money the fastest.”

This announcement comes after a downturn in the market for NFTs

Christie’s Ventures will primarily focus on technology improving the consumption of art, financial innovation and web3 companies, according to Thakkar. Web3 is a vision of the internet that incorporates cryptocurrencies and blockchains, databases that store cryptocurrency and records of other transactions.

“With each of these three areas, we get to work with pioneering entrepreneurs,” said Thakkar. “Some of these pioneers will also become collectors, so we want to make sure we engage with them.”

Christie’s has been engaged with NFTs since 2018, said Thakkar, when the auction house held its first Art+Tech Summit, a conference centering on digital art technologies. “We continue to be optimistic and positive of the trajectory of digital art and NFTs,” he said.

However, not everyone is as enthusiastic. The hit taken by cryptocurrency in recent months has led to a sense of disillusionment in the art world, according to Jon Ippolito, a professor of new media at the University of Maine. He believes once the hype surrounding cryptocurrency is no longer profitable, the incentive for money to flow into the NFT ecosystem will dry up. “Some people used art to validate the cryptocurrency they owned,” said Ippolito. “It’s not that I think NFTs will definitely disappear, but this is a low point in the morale.”

The downturn has led to companies pulling out from blockchain investments, said Ippolito, who added that Christie’s Ventures was launched at a strategic time. “They’ve made a lot of money with (NFTs), and the people who are true believers should stick with the program.”