Betting on Your Future

Upon completing their degrees, many students would like to set up their own startup companies or pursue other risky (and potentially low-paying) career avenues—but they can’t because they need cash. They may have already envisioned the path to their dream job or conceived of a business that they’d love to found and develop, but student debts or the need for startup funding dampen their aspirations.

To give new graduates the support they need to pursue their dreams, Dave Girouard, former president of Google Enterprise and vice president of Apps at Google, founded Upstart, a new kind of crowd-funding platform that allows grads to raise money while offering backers the opportunity to earn a share of the upstarts’ future income.

Apart from generating much-needed cash, Upstart can also be a way for grads to tap into new sources of advice. 

Here’s how it works. Aspiring “upstarts” put together a profile detailing their skills, credentials, and objectives. Using a statistical program that takes into account schools attended, fields of study, and work experience, Upstart predicts upstarts’ future income and determines how much capital they can raise—a fixed amount for each percentage of your projected income that you are willing to return to investors. You can offer up to 7%, and if you are successful in attracting at least $10,000 from backers, you agree to repay the loan in 10 years. If your income turns out to be less than $30,000 for some of those years, another year will be added to your repayment contract, up to 5 additional years.

Apart from generating much-needed cash, Upstart can also be a way for grads to tap into new sources of advice. Backers are invited to mentor their upstarts as a way to promote the success of their investments.

“We have a surplus of bright young people who want to carve their own way – to take a risk, start something new, and make a difference. … And while not generally creditworthy in the traditional sense, there are clear and measurable signals reflecting their accomplishments and hinting at their potential. Yet we collectively tell them to take the job,” Girouard wrote on the Upstart blog when the platform was launched last August. “Could we imagine a future where talented grads are given a modest window of economic freedom, combined with the help and support to do what they were really meant to do?”

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