What is an art fund?

Art funds are typically privately offered funds which generate returns by acquiring and disposing of works of art, and are managed by a professional art investment management or advisory firm. They can vary in size, duration, investment focus, investment strategies, and portfolio restrictions.

Who can see information about funds?

Information about specific funds on Arthena's platform is limited to the logged-in community of Arthena members who have verified that they qualify as "accredited investors."

Regardless of who can see the details of an individual fund, the fund manager, along with the company, will ultimately select which investors can participate and invest.

How are Arthena's funds regulated?

Arthena’s method of marketing and selling shares in Arthena funds rely on Title II of the JOBS Act. Title II became effective on September 23, 2013, allowing the general advertising of securities offerings, provided all purchasers of those securities are accredited investors. As Arthena's funds purchase artworks and not securities, they are not governed by the Investment Company Act of 1940 or the Investment Advisors Act, and investors, therefore, do not benefit from such protections. Shares of Arthena's funds are securities offerings and are thereby governed by the Securities Act of 1933 and its stipulations regarding proper disclosures and rules against fraud.  

What is the JOBS Act?

The Jumpstart Our Business Startups Act (JOBS Act) was passed with bipartisan support by Congress and signed into law by President Obama in April 2012. Following on the success of donation-based crowdfunding, the JOBS Act now enables businesses to solicit funding from the general public – although only Accredited Investors are allowed to invest at the moment. The JOBS Act also aims to expand investment opportunities to non-accredited investors, who have historically been excluded from this process.

What services does Arthena provide to its members?

Arthena handles all administrative work associated with maintaining funds on the platform, allowing investors to focus on tracking and enjoying great artwork. This includes legal work, verification of purchased artwork, insurance, and state-of-the-art storage and security for works owned by the fund.

Investors also have the opportunity to participate in Arthena events and to attend selected art world events. Investors also have the opportunity to directly ask their fund manager questions that they might have about the fund, works owned by the fund, or the art market in general. Arthena believes strongly that our members should be able to enjoy and explore art on their own terms.

What is an Accredited Investor?

An accredited investor is someone who meets the standards set by the US Securities and Exchange Commission, which allow them to invest in certain private securities offerings. At this time, in order to participate in a fund on Arthena's platform, you must be accredited.

In general, you are accredited if you are:

  • An individual with annual income over $200K (individually) or $300K (with spouse) for each of the last two years and an expectation of the same this year

  • An individual with net assets over $1 million (including spouse's assets), excluding the primary residence

  • An institution with over $5 million in assets, such as a venture fund or a trust

  • An entity made up entirely of accredited investors

Please see the SEC's website for the full definition.

How do I show that I'm an Accredited Investor?

If you are accredited based on income, you will need to provide documentation of income for the past two years. This can be in the form of tax returns, W-2s, or other official documents.

If you are accredited based on assets, you can provide recent brokerage statements clearly showing your name, the date, and the value of your account(s). We will also pull your credit report and deduct any non-mortgage debts (as long as the mortgage does not exceed the value of the mortgaged property) from the value of your assets to arrive at net assets.

You can also provide a recent letter from a reviewer like a CPA, attorney, investment advisor, or investment broker. The verification process will allow you to send an email to your reviewer using acceptable language.

Can individuals outside the U.S. join funds?

Yes! We welcome users from all around the globe and are currently active on five continents. Individuals outside (or inside) the U.S. should consult a tax attorney if concerned about potential tax implications.

Do I need to meet US accreditation standards if I'm not in the US?

Yes. The regulations governing general solicitation require evidence of accreditation from all investors, not just US-based investors.

Is a credit report necessary?

If you claim that you are accredited because you have over $1 million in net assets, then we have to verify your debts as well. Only total debts (excluding mortgages) will be included in your accreditation report.

What information do I provide in an accreditation report?

For individuals:

  • Type of collecting entity (individual, trust, firm)

  • A letter from your attorney, or your designated third party advisor, stating that you have presented documents that indicate either income or assets above the required accreditation threshold

  • The date and total debts (excluding mortgages) from your credit report

  • The date you last confirmed you were still accredited

For institutions, we will provide links to the evidence of accredited status (government filings or other sources).

How long does an accreditation report remain valid?

You must swear you are still accredited each time you generate a link to share an accreditation report. However, the proof needs to be updated only periodically. How often depends on what the collecting entity is (individual, firm, trust) and whether you use income or assets to prove your status.

  • Income proof can be used until April 15th of the year following its verification;

  • Asset proof can be used for 3 months;

  • All Other cases, such as proof of a trust's accreditation through the accreditation of its entire individual membership are currently limited to 3 months

Does Arthena handle accreditation verification for investors?

Yes. Arthena's investors must complete accreditation reports through their user dashboards.

What is a commitment to a fund?

Commitments are indications that a potential investor intends to join and invest in a fund on the platform. When there are enough reservations for a particular fund (when it has reached the participation goal), committed investors will be invited to formally join the fund as full-fledged members of the Arthena community.

What is the minimum investment amount required to participate in a fund?

The overall size of each fund is designed to allow the fund manager maximum opportunities to acquire works they believe will make a high-quality fund. Each fund manager also sets the minimum amount that each investor must commit in order to be accepted as a member of the fund. The amount will vary based on the fund and the manager’s needs but is generally $10,000. We have found that when each investor provides this amount, the strength of the overall fund increases. They are then able to acquire elite works that investors would not be able to acquire without the aggregate resources of the fund.

Are there other costs to participate in a fund?

Personal Funds

Arthena charges no annual management fee for these funds on our platform. Fund expenses associated with maintaining each fund are included in the target size of the fund and do not constitute an additional fee to investors (1.5% of original investment amount). Fund expenses include: legal and administrative fees related to structuring the fund, insurance on purchased artwork, storage costs, compliance and verification costs associated with authenticating purchased works, and administrative costs connected to management, reporting, and maintenance. Arthena charges zero additional fees to keep costs as low as possible for our investors and can do so because we work with our partners in the art world to obtain the most competitive rates on verification, insurance, and storage.

Arthena takes what is known as carry (an industry-standard 20% of any profits) from each fund. Carry is calculated only after all principal investment has been returned. This is similar to the percentage taken by many venture capital firms, private equity firms, hedge funds, and platforms like AngelList and FundersClub. Arthena profits only when its funds profit, so we have every incentive to ensure the highest performance of each fund.

Institutional Fund

The Institutional fund charges a standard 2% management fee and 20% performance fee (explained above as "carry"). An additional fee of up to 1.5% is assessed to cover storage, shipping and insurance for acquired assets. Management fee may vary from these numbers depending on level of commitment to the Fund or size of investment. 

When do I transfer money and join a fund?

Once a fund has reached its participation goal, investors who are accepted will receive an invitation to sign documents and transfer money to the acquisition budget of the fund, which will then formally open.

What information do I receive after I invest in a fund?

When you join a fund, you will receive the following documents:

1. Documents related to the fund’s formation such as its operating agreement, private placement memorandum, and subscription agreement.

2. Terms of the fund as well as templates of the underlying documents that the fund signs.

What is carry?

Carry is a percentage of any proceeds from a fund after its five-year life. After carry has been assessed, the remainder of proceeds are distributed proportionally to investors.

When is my commitment returned?

Arthena funds have a maturity period lasting five years, giving enough time to explore the art market in depth and make responsible acquisitions of a number of elite works. Throughout the maturity period and at the closing of a fund, Arthena works with their private partners, as well as institutional partners like galleries and museums, to place works owned by the fund.

Any net proceeds at the closing of a fund will be distributed proportionally to investors based on the size of their initial investment, along with their initial commitment amounts, after carry has been assessed by Arthena.

What's the legal structure of an Arthena fund?

Investors do not invest directly in Arthena but rather in an investment vehicle in the form of an LLC that is created for each specific fund. The logistics of each fund are managed by Arthena and the fund administrator for each fund is Assure Fund Management.

Who is Assure Fund Management?

Assure Fund Management LLC serves as the administrator of each Arthena fund. They are a back-office provider for many venture funds.

They have over 20 years of private equity investment experience, and a world-class team of experts will handle administration for each fund.