How To Bet Money On Your Future Success

waderoush writes "Say you're in your early 20s, you're finishing college or graduate school, and you're smart but poor — and you've got some big student loans hanging over you. You're pretty sure that within 10 years you'll be selling your first startup or earning a high-six-figure salary. But you need some money *now* so that you can actually start the company, and avoid taking a corporate job. Shouldn't there be a way to calculate how much you'll be worth, and borrow against that promise of future success? Upstart, a new Palo Alto investing operation founded by a group of ex-Google employees, thinks the answer is yes. In a new spin on the crowdfunding model, the organization gathers data from recent graduates such as schools attended, academic transcripts, job offers, and credit scores. Its 'pricing engine,' based partly on techniques developed to assess job applicants at Google, determines how much each aspiring 'upstart' should be allowed to raise from investors per each percentage point of their future income. Upstart has already helped 35 young people raise amounts varying from $10,000 to $170,000; the upstarts, who must pay the money back over a 10-year period, say they're using the funds mainly to retire student debt or bootstrap startups. 'We can look at a 25-year-old and very quickly assess whether he or she would be successful at Google,' says Upstart founder Dave Girouard, formerly the head of Googles $1 billion enterprise apps division. 'My whole thesis was, if you could use the same algorithms to predict whether he or she would be successful beyond that, in the business world, that would be pretty useful.'"

Comments

This isn't gambling.

[bsharp8256]

If someone is so confident in their startup idea, why not try to get actual investors instead of an "investment" you have to pay back?

This is just the next step up from student loans.

Re:This is the dumbest idea

[h4rr4r]

You sir are brilliant.

The other upside to this is to pay off your student debt and then file bankruptcy. Surely this debt is dischargeable unlike student loans.

Re:I should really patent this idea, but....

[BitZtream]

That was my thought. Take out student loans, go to school, get one of these loans after you get out, use it to pay off your school loans, default on this new loan, wait for it to come off your credit record in 7 years. Far better than having that school loan that stays on your record forever otherwise.