According to an artprice report published last year, the global art auction turnover was estimated at $6.9 billion for the first half of 2017. The market is dominated by the US, which accounted for $2.2 billion for the period. China came a close second with $2 billion in turnover. Emerging markets of countries like India did not even feature on the top ten markets. But, Mumbai, India-based Saffronart, is trying to make a difference.
Saffronart was founded in 2000 by husband and wife team of Dinesh and Minal Vazirani, active art collectors themselves. Together, the two wanted to set up a company that would cater to the growing community of Indian collectors, while integrating them with the international community. The idea behind the company came to the two when they returned from the US in the late 1990s. The couple liked to collect art as their hobby, but soon realized that it was not an easy hobby to pursue in India. Besides logistics and infrastructure issues, there was very little information available to art collectors in India. Spurred by the idea, the two started to build India’s largest online art auction platform.
Saffronart operates an online and live auction model for art and collectibles. As part of the auction platform, it produces physical catalogues and conducts preview events in metropolitan cities including Mumbai, New Delhi, New York, London, Singapore, and Hong Kong. The auctions allow bidders around the world to participate simultaneously in sales through multiple channels including telephones and mobile devices.
Saffronart started as an auction house for fine art, but it has diversified into other offerings. In October 2008, it extended its online auction platform to jewelry and watches. Today, its collection includes antiquities, sculptures, artefacts, collectibles, and even real estate. Not only does it conduct auctions, but it also organizes curated exhibitions, both in physical locations and online; offers services including art advisory, private sales, valuations, and art storage. What began in Mumbai has now expanded to international markets. Saffronart has gallery spaces in Mumbai, Delhi and New York, and an office in London to cater to the local markets.
To attract a wider audience, in 2013, Saffronart launched StoryLTD – a service focused on lower priced collectibles. Where the average lot price of Saffronart collections was $30,000, StoryLTD’s average was $2,000. But Saffronart has seen migration from customers of StoryLTD to Saffronart.
Saffronart has managed to build a niche for itself in the Indian market. Soon after launching, the company had sold $125,000 worth of fine art. Saffronart’s financials are not widely known. A Harvard Business Case study projected revenues of $45 million in 2007 when the Indian art auction market was valued at $125 million. But the subsequent economic conditions have hurt its revenues. More recent figures are not known. In 2016, it sold lots worth $30 million. Obviously, the revenue impact for Saffronart is only a fraction of this amount.
Saffronart’s funding history is not widely disclosed. It did raise a $12 million round from Sequoia and Baer Capital in 2007 besides their own seed funding of Rs. 1 crore (~$200,000).
Questions for Saffronart’s Board
Saffronart, despite being a VC-funded company, has not really grown at venture-scale. It has been a decade since Sequoia invested, but the revenue growth is nowhere near the velocity expected.
Although Saffronart has successfully managed to develop a market for sale of fine art and collectibles in India, that market seems to be quite small. At the same time, it is a much bigger task to expand a significant level of presence in the international markets and create demand for Indian Art abroad. Some of this demand has developed organically, but not at the scale the company may have hoped. What strategies would unlock a more robust market for Indian Art? And conversely, what merchandising strategy would appeal to the collector base the company has developed in India?