By Ryan Johnston, Chief Marketing Officer, aShareX, Inc
Auctioning, a quintessential method for gauging asset values, dates back to the Babylonian and Greco-Roman civilizations. Auctions evolved from humble beginnings, gaining prominence in the European Middle Ages, and later formalizing through renowned institutions like Sotheby’s and Christie’s in the 18th century. As technology advanced, auctions expanded into the digital realm with phone and internet bidding becoming norms.
Classic Challenge, Modern Solution
Traditionally, high-value auctions operate as a bidding war until only one bidder remains, oftentimes excluding those with more modest means. However, thanks to the emergence of fractional bidding, a novel solution for engaging broader audiences is finally available.
Fractional bidding enables auction participants to bid for partial ownership and thereby compete against each other, and traditional 100% bidders, for ownership of assets. When fractional bidders win an auction, they receive shares in the asset via an SEC-qualified offering. This concept of fractional bidding was originally brought to market by Los Angeles-based fintech firm aShareX.
The incentive for fractional bidders is clear: invest in previously unattainable high-value assets. There are also benefits for auction houses: more bidders means higher potential hammer prices, reduced risks of passed lots, and opportunities to drive deeper engagement with – and higher lifetime value (LTV) from – their existing user base.
Non-Trivial Obstacles
Historically, fractional bidding faced numerous obstacles:
Auction Awareness: Limited marketing reach to the general public.
Organizing Fractional Bidders: Auction houses lacked the technical infrastructure to aggregate large numbers of fractional bidders.
Dynamism During Auctions: Without pre-organized fractional bidders like a Decentralized Autonomous Organization (DAO), there was no mechanism for bidders to respond in real-time to dynamic bidding fluctuations.
Processing Fractional Wins: Lack of established processes hindered the development of communication, payment, and regulatory-compliant post-auction asset management systems.
Technological Environment: Pre-internet, building systems to coordinate fractional bidding were nonexistent.
Despite these challenges, the rise of mass marketing mechanisms has provided platforms to connect with potential bidding audiences on an unprecedented scale. Additionally, technological innovations have enabled a paradigm shift in the auction industry.
Examining each historical limitation reveals a foundational shift in the landscape enabled by modern technological solutions:
Awareness: Social media and online communities enable targeted communications to fan groups, expanding the reach of marketing touchpoints.
Organizing Fractional Bidders: Technology can facilitate the assembly and coordination of fractional bidders.
Dynamic Bidding: Fractional bidders can now participate online in real-time auctions, competing directly with one another as well as traditional 100% bidders.
Processing Wins: The integration of an auction system with payment processing and regulatory frameworks enables seamless management of fractional winners.
Systems Integration: Technology brings together fractional bidding, regulatory compliance, and asset management, making for a seamless path to fractional ownership.
Inevitable Innovation
The inevitability of fractional bidding is evident in recent endeavors. For instance, Sotheby’s 2021 auction of a rare copy of the U.S. Constitution witnessed the participation of a DAO, showcasing the potential for fractional bidders to influence auction outcomes.
In a recent aShareX auction, fractional bidders similarly played a significant role in the sale of Contemporary Artists Series 1, a single-lot collection of 8 artworks by 6 ultra-contemporary artists. Notably, 28 winning fractional bidders emerged as shareholders with an SEC-regulated security evidencing their ownership, demonstrating the efficacy of fractional participation.
The auction’s success hinged on coalescing demand levels at various price points, facilitated by pre-auction bidding activity and real-time bidding during the auction. Fractional bidders ultimately emerged victorious, signaling a paradigm shift in high-value auctions.
In sum, fractional bidding is reshaping the landscape of high-value auctions, democratizing access and driving competitive bidding. As barriers continue to fall thanks to innovative technological platforms like aShareX, the future holds promise for a more inclusive and dynamic auction ecosystem.
About aShareX
aShareX is the first and only fractional auction marketplace. aShareX’s patented technology enables fractional bidders to compete against one another as well as traditional 100% bidders for ownership of high-value assets. With a commitment to making alternative investments accessible to a broad audience, aShareX empowers investors, collectors and enthusiasts to participate in a variety of asset classes with market-determined prices, ease-of-use, lower costs of ownership, investor-controlled liquidity, and modest investor qualifications. Visit https://www.asharex.com for more information.
