With some exceptions, investors have tended to view art as a niche asset class—volatile, illiquid, and largely the domain of collectors rather than institutional portfolios. But what if the real opportunity lies not only in expensive paintings and sculptures but also in the broader creative economy?
As public funding for culture dries up and private capital plays a bigger role, investors who understand how to price and structure deals in this space could tap into a market hiding in plain sight.
From film franchises to digital content, intellectual property in the arts is generating billions in revenue, yet remains undervalued by traditional finance.
“As an asset class… culture and creative industries are not being taken seriously as a real investment opportunity,” decried Caroline Norbury of Creative UK, which she described as “a specialist investment business for the UK’s cultural and creative industries.” Nevertheless, she said creative industries generate some 4.000 billion US dollars and employ over 50 million people worldwide.
In 2023, UNESCO, the United Nations Educational, Scientific and Cultural Organization assessed the “estimated global worth” of world cultural and creative industries at 4.300 billion.
Industry pillar
According to the OECD, a growing understanding of the role that culture and creativity can play in economic development has emerged, said Adriano Picinati di Torcello, Deloitte Luxembourg’s global art & finance coordinator, who’s enthusiastically worked on this subject since 2008. This includes “a more prominent role for private investors” and “a more complex ecosystem of financial support, covering public, private and philanthropic funding.”
The more familiar art & collectibles prized by high net-worth individuals, alongside the visual arts or business art sectors, are just one facet of the wider creative industry. It produces the full gamut of art and other cultural work—films, television, dance, paintings, sculpture, and beyond.
The UK is considered a driving force in the creative economy, with UK creative industries generating approximately 135 billion euros annually.
The tendency to undervalue the cultural sector even extends to some of the more obviously successful, global franchises, such as the Marvel or Harry Potter series. Norbury explained that even such ultimately profitable vehicles have been undervalued by traditional investors, “many of whom passed on the opportunity to invest early on in their development.”
Stifling innovation
The disconnect between the creative economy and traditional finance, she explained, “isn’t just leaving money on the table. It’s actively stifling innovation.” She noted that conventional public sources are drying up across the Western world.
Art and creativity can play a part in solving some of mankind’s biggest problems, explained Adama Sanneh of the Moleskine Foundation: “The era of creativity is forcing us to face intersectional problems.”
To illustrate, he mentioned the war in Ukraine and plans for its post-war recovery. “How do you restore a sense of self in a community that’s been raped by war in the past 15 years?” he asked.
Pushing the line
He explained, “the role that philanthropy can play to push the line of what is possible so that there is a gap sometimes in[to] which more classic investors come in, and where philanthropy can carry the baton until a certain point.” By this, he meant that philanthropy “can make something seen as impossible, possible.”
The lack of a common language about the role of investing in culture is why, as Kern put it, “all the knowledge is there on the table, but we’re not taking it forward.”
“I think we should start to connect the dots.”
Luxembourg leads the way
Tonika Hirdman, director general of the Fondation de Luxembourg, explained that this country already created a bridge between the arts and finance 15 years ago in establishing her foundation.
Her experience has led her to disavow applying standard financial metrics when investing in the arts. “I’m not sure it’s useful to work with KPIs and close monitoring when you are supporting the arts and culture, because in that area, you want to give as much freedom as possible to the artistic creation, and I fear that being too detailed, monitoring too closely, you’ll be too controlling, and will kill some of that creativity.”
The day-long 16th Deloitte Private Art & Finance conference was held at Deloitte last fall.