Despite the enormous cultural heritage of our country, public funding of culture in Italy is increasingly limited. The scarcity of public investment has contributed to making private intervention more attractive, both in terms of traditional and alternative financing. In the private sphere, the role of the banking foundations is still very important (even though it is also decreasing), which provide the art, activities and cultural heritage sector with almost a third of the total funding that these sectors receive.
According to the latest Nomisma report (November 2021), the art industry in Italy generates a turnover of 1.46 billion euros, with an overall economic impact on the country of 3.78 billion in induced activities, and employs approximately 36 thousand people in the entire production chain. At European level, Italy accounts for 2% of the market in terms of value sales of works of art, a share that rises to 6% with the UK leaving the EU.
In 2019, the turnover of auction houses, galleries, antique dealers and art dealers reached €1.04 billion, plus €420 million from logistics, publications, insurance, fairs, education and restorers. For every euro of turnover recorded in the art market, according to the multiplier effect calculated by Nomisma researchers, an output of 2.60 euros is estimated, thus explaining the enormous overall economic impact on the country, amounting to 3.78 billion euros. In this scenario, the Covid-19 pandemic has had the effect of accelerating certain processes already in evidence in the sector, such as specialisation and digitalisation.
To estimate the real value of the art industry in Italy, the research considers the entire universe of operators gravitating around the supply chain. The highly specialised sector believes that the main challenges facing our country are regulatory simplification, reducing the gap between training and the world of work, and digitalisation. Overcoming these challenges means allowing Italy to regain its role as the 'factory of beauty' in the world.
In recent years, there has been a reduction in the number of players in the market against an increase in overall turnover. In 2019, there were 1,667 galleries operating in Italy, 610 fewer than in 2011; a similar situation to that of antique dealers, who went from 1,890 in 2011 to 1,593 in 2019. However, transactions jumped 2% compared to 2011.
The most virtuous and competitive businesses are emerging, capable of specialising and adapting to the needs of the national and international markets. The economic downturn caused by the pandemic has led companies to further implement digitisation.
In the last two years, total and partial lockdowns and the cancellation of events and exhibitions have had an impact on companies' turnover and the growing demand for credit, affecting 33% of them. In 2021, the economic and financial emergency had not yet been fully resolved, with 40% of companies reporting an increased need for credit to continue their business.
At a time of a credit crunch, a shortage of public resources (especially for contemporary art) and a lack of money in general, art must necessarily reinvent itself through new forms of access to credit. In this context, a breath of optimism comes from crowdfunding.
To date, equity crowdfunding has proved capable of restoring the availability of financial means for businesses in all sectors of the economy, making up for the shortcomings of the banking system and those of the venture capital market. In fact, this innovative financing channel has raised a total amount of capital since the start-up of the Italian market of around €252 million, strengthening the financial credibility of issuers and projecting them towards a paradigm shift.
Equity crowdfunding is based on the principle of financial democratisation and offers investment opportunities previously precluded to small and medium-sized Italian companies. An empirical analysis by La Sapienza University of Rome showed that the new industrial fabric of the arts is very keen on using crowdfunding as a financing tool. The demand was enthusiastic and ready to seize the opportunities offered by the European single market and the use of foreign investors, recognising it as a reason to launch new funding rounds. In fact, 70% of the sample, charmed by the broader scope of the campaigns, the opportunity to interface with potential subscribers with a higher level of preparation, investment readiness and ability to evaluate the business idea, planned or even already launched new campaigns, and there was no shortage of more daring projects aimed at entering regulated European markets.
The results obtained through the empirical survey point to a growing internationalisation of the sector, together with a promising role for mini-bonds and crowdlisting. One lever of competitive advantage among portals is the degree of support guaranteed to proposers at every stage of the campaign, indicated by 35% of the sample as a determining factor in their choice of platform, and the ability to facilitate contacts with professional investors.
Support at all stages of the campaign and access to selected investors are also two of the advantages of using our platform. At the moment we are live with a fundraising campaign for Next Exhibition, an extremely interesting Italian reality and leader in the organisation of multimedia and interactive temporary exhibitions in Italy and abroad. For more information on this project you can register at this link.