The rapidly expanding investment platform YieldStreet announced today that it has acquired Athena Art Finance, a boutique lender that provides loans collateralized by artwork to collectors and dealers.

But the purchase cost the George Soros-backed YieldStreet only $170 million—significantly less than the $280 million that was initially invested into Athena when the company was founded in 2015 by Olivier Sarkozy, half brother of the former French President Nicolas Sarkozy. Back then, Athena had the financial support of Carlyle Group LP (where Olivier was previously managing director) and the Geneva-based private-equity firm Pictet. But rumors surfaced last year that Carlyle was trying to unload the financing firm.

So is the new acquisition a sign of continued growth in the art-finance market? Or a red flag that this niche isn’t as sustainable or profitable as it was once thought to be?

In its inaugural report on art-world financing last spring, the European Fine Art Foundation (TEFAF) found that loans to independent collectors account for as much as 90 percent of the estimated $20 billion art-finance market. It’s not hard for such a juicy figure to generate excitement, especially considering that the latest annual report from Art Basel and UBS projected the worldwide art market to be worth about $63 billion. And Athena, which offers as much as 50 percent of an artwork’s appraised value to borrowers, has already earned upwards of $225 million in originations since its founding. 

But since a vast majority of art financing goes to private clients borrowing against their own art collections—often to reinvest money into other, non-art assets—it’s not easy to project the art-financing industry’s effects on the art market. Just as importantly, art-secured lending remains almost entirely an American affair, as only the US currently allows borrowers to retain physical possession of their collateral throughout the course of a loan. 

There may also be an inherent disconnect between the Athena acquisition and Yieldstreet’s mission statement, which declares that the company intends to  “democratize” institutional-quality investments in real estate, commercial loans, and other arenas usually only available to major hedge funds. Its clients have invested more than $650 million in its four and a half years.

Pursuing a high net-worth art clientele is an awkward fit for a firm aiming to “democratize” investment opportunities. This is especially true since statistical and anecdotal evidence suggests that the number of top-tier collectors is not growing by leaps and bounds. As shown in the latest artnet Intelligence Report, even the total amount of money being spent on art has been relatively stagnant in recent years.

Another potential concern is Athena’s specific clientele. The TEFAF report found that only eight to 10 percent of the art-secured lending market by value went to gallerists and dealers—three-quarters of whom were borrowing from private banks based on their status as high net-worth individuals, not because their businesses have been deemed worthy of funding. Yet Athena has estimated that nearly half of its clients are dealers, suggesting that much of their loan book consists of a small portion of the overall market.

Still, some support exists for a more optimistic view of YieldStreet’s newest addition. Last year, TEFAF found that only 15 percent of surveyed dealers had borrowed against art to date, with nearly half calling the due diligence required of the loan process “more trouble than it was worth.” If many of them change their minds, or if more collectors add art-financing to their portfolios, this niche market could meaningfully expand. If so, perhaps the guidance of Soros and newfound synergies with the rest of Yieldstreet’s business (and client list) can put Athena in a position to capitalize.