Want to sell a future portion of your income to fund a business idea? Welcome to Upstart .
After passing a rigorous background check, would-be entrepreneurs build a fundraising page with their business proposal and credentials laid out, just like an artist might raise funds on Kickstarter. Then, the site’s cache of “backers” (i.e. investors) have their pick of the litter. Investments start at $100, and backers can fund however much or little they'd like. On the flip side, Upstarts can also deny investments from backers if they choose.
Pretty sweet considering that many of these students are coming to this because they have large student loan debts and otherwise coulnd't scrape together the money to start a business. I'm also gathering that much of the initial money that they raise goes to help pay off the loans and help fund the idea.
For their trouble, backers are guaranteed a percentage (up to 7%) of their Upstart's income for 10 years after they launch. There are some exceptions in place for students who have trouble getting off the ground or are still school, but Safoian said he's already beginning to see fruits of his investment.
Not necessarily a bad trade off, getting funded for a concept and then pledging a percentage of your income against it. In essence, you are betting on the person more than the idea which seems to make sense to me. Though realistically I guess it is no different than a traditional loan with more upside depending on whether you hit it big or not. It almost feels like this is allowing rich backers to bet on the success of people, almost akin to sports agents getting a percentage of contracts etc.
Anyone here willing to take this trade? Raise money for a percentage of your future income?
this is almost like third party ownership for rights to soccer players, interesting
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