Buying shares in... people

[McLovin]

Fellow ASFers i encourage you to visit https://www.upstart.com/ be prepared to spend a half hour looking around and actually look at a few of the profiles, many with prestigious US university degrees, many that have jobs, many wanting to or are already involved with start ups...on the whole these people are not idiots lining up for hand outs.

I stand corrected, the whole thing seems completely tilted toward the "upstarts".

“It’s total freedom to change your mind,” says Nathan Sharp, 26, a pilot round student who worked in public health before attending business school. “One of the risks on [the investors’] part is if I choose to go back to public health and earn less than $30,000 a year, then they lose everything.”

...

Upstart estimates that typical students will raise around $30,000 in exchange for 2 to 6% of their 10-year income, designed to give investors a 6% annual return. If they make less than $30,000 in any year, they’ll owe nothing, but the agreement will extend up to another five years, and the return for investors maxes out at 15%. Girouard describes it as risk capital. “It’s a little like a loan, but it also has elements of equity,” he says.

http://www.forbes.com/sites/alisong...unding-your-education-and-career-really-work/


So you basically are taking on highly speculative equity risk with returns that range from losing all your money to making a maximum of 15%. I agree with you, the Upstarts are indeed not idiots. What a great way to get someone else to pay for your education. What's the upside here?

 

[Valued]

I stand corrected, the whole thing seems completely tilted toward the "upstarts".



http://www.forbes.com/sites/alisong...unding-your-education-and-career-really-work/


So you basically are taking on highly speculative equity risk with returns that range from losing all your money to making a maximum of 15%. I agree with you, the Upstarts are indeed not idiots. What a great way to get someone else to pay for your education. What's the upside here?

If someone wants to give me 30k right now for 2% of my income for the next 10 years then be my guest How about we do this 50 times over so I get 1.5m and you all get 100% of my income and then I quit my job and make 150k pa for the next 10 years doing nothing.

 

[cynic]

If someone wants to give me 30k right now for 2% of my income for the next 10 years then be my guest How about we do this 50 times over so I get 1.5m and you all get 100% of my income and then I quit my job and make 150k pa for the next 10 years doing nothing.

Surely your interest earnings would also count as income to be distributed amongst your 100% shareholders!

 

[skyQuake]

I guess its similar with equities.

The company knows whether equity or debt is cheaper and act accordingly!

Also I wonder if there is a franking issue if that person has already paid tax? What if 2 people buy shares in each other? Perhaps some kind of tax avoidance scheme can be hammered out?

 

[Valued]

Surely your interest earnings would also count as income to be distributed amongst your 100% shareholders!

Haha that's true. Maybe I will put it in a no interest account to spite them