I submitted my name, email and university only to receive an email that said that I wasn't qualified because I wasn't part of the five schools in their pilot program. I wish that there was transparency from the get go instead of baiting me into entering in my personal information.
wasd,
Thanks for your interest in Upstart! Upstart is currently only available on a limited number of campuses, and unfortunately University of California-Berkeley is not a part of the program at this time. We are running a limited pilot at Arizona State University, Dartmouth, Rhode Island School of Design, University of Michigan and University of Washington. Your interest will be crucial in helping us decide where we should go next!
We will let you know as soon as we open the Upstart network up to more campuses, including yours.
Jeff,
Team Upstart
EDIT:
I vaguely remembered this being posted before. Its been up a few times in the last 6 days without much discussion and here is a larger discussion from 4 months ago:
The pilot schools are all listed in the menu next to the How it Works link, so it doesn't seem like they are purposely being sneaky.
My guess is that they are using the "I'm interested" button and form as a proxy for demand. If they listed the schools in that popup and you didn't happen to go to one, you would have never filled it out and they couldn't collect that metric.
It's not that they are being sneaky - it's just that I'd like it to be more obvious. As someone outside of the US, I find it annoying when I sign up for a new service only to be told it's US only at the last minute.
If you are US only, that's cool - just remember to make that clear. Or at least do something useful with my info: "We are currently US only, but if you would like us to contact you when we expand, please click here"
"I wish that there was transparency from the get go instead of baiting me into entering in my personal information."
I'm going to say this in the nicest way possible.
Life is about opportunities and attitude. Please do not worry about the fact that you filled out a form and some company (which by all means appears legit unless it was totally fabricated) has a truly nominal amount of your information. They will probably use it to gauge what schools to open up going forward most likely.
I mean that seriously. I filled out the form as well (as a backer). There is nothing they requested that is of any consequence.
Once again I point this out for your own benefit as I know it is common on HN to rally around something like this as if you've been truly violated and taken advantage of.
doesn't exactly jive with someone who prefaces what they say with "I'm going to say this in the nicest way possible."
"doesn't help either"
Feel free to have a vendetta if you want and downvote my comments if you feel appropriate based on what you personally feel is condescending. I've already made my money (the old fashioned way by the way) and don't really desire to have to sugar coat my reactions based upon my years of experience.
Saying "I'm going to say this in the nicest way possible." creates a negative implication in regards to the poster. Thus you are not putting it in the nicest way possible.
It's like "No offence intended", if you say that, it means what you are about to say is offensive.
"I'm going to say this in the nicest way possible: you're an idiot." Disclaimers only disqualify specific interpretations as judged by the speaker, they don't define the terms of the receiver.
Why is it limited to only recent grads? A lot of people have that "some day" thing they want to do but chose a "safe job" instead. As a backer, I'd be much more likely to fund a console veteran who wants to make indie games (i.e. reasonable chance of success) than a recent CS grad who has a job offer at BigCorp.
The thing that sets this apart from Kickstarter is that you're backing a person and not a project. If their "go for it" project fails, though, it'll feel a little bit like indentured servitude.
This could be an amazing investment depending on who your mentor is. If Warren Buffett invested $100k in me[1] for 10% (valuing me at $1m) of my future income I would do it for the sole fact that I would have a direct line to the Warren Bat Cave, that would be priceless. If Joe Schmoe wanted to invest in me I wouldn't do it. The question is essentially will the mentor help me increase my lifetime earnings (and lifetime happiness) more then the cost of the mentorship. I could just ask for $1m put it in a index fund, get my 7% annual income of $70k and give my investor $7,000/year and be set for life. The flip side is many mentors/advisors will not invest in your startup but provide their network and mentorship while maybe only asking for 0.25% of your startup, not lifetime earnings.
I would like to see this list of mentors, but for now I wouldn't go through upstart.com...
I would never ever do this. Give a portion of your income, whatever the outcome of the funding ? (The site doesn't say much, so I'll have to assume the worse). Crazy. What if you launch yourself in a venture that does not work out (like startups often do) ? Then you are left with a much greater financial burden. So much for "paying your student loans".
If however you launch a successful venture, maybe backed by other sources of funding, you will need to pour a considerable amount of money to this people, money that is not a just return on their investment (it's more). What if you launch multiple ventures ?
And then what is income ? If you have equity in a company, is it income ? If not, one could think of many ways to sidestep the process.
Without more info, this offer stinks. And I expect it still does after clarification (but I might be going all wrong about this). Making money, as I see it, is about gaining financial freedom. This just seems to put another yoke on your shoulders.
Not really. What I get from this, it's basically just a personal loan, which you pay back with interest. It's like Kiva, but for different market.
Did you read the terms? The income is the income on your tax report. You don't have to pay anything if you earn less than $30,000 annually. If you are very successful, the maximum annual payment is 14.99% of the loan (otherwise 1-7% of your income, depending on the total amount). You always pay for 10 years. However, these terms are rather confusing and I didn't see any actual interest rates etc. on the site.
All very valid questions, but don't judge until you try it... I graduated from one of the schools they are testing this with and submitted my name. Just got an email soliciting questions from me about how it works, and they offered to set up a phone call to have a discussion about the ins and outs (which I've taken them up on). You can be sure I'll be asking your questions and more, but let's wait and see exactly what the deal is. I'll let you guys know how it turns out.
I didn't use the right phrase; what I was trying to say was, don't knock it until you know all of the facts; norswap is assuming the worst, but that's where the problem is, the assumption. It's not more valid than assuming the best. Without the facts, it's all just speculation. I didn't mean literally try it, but know exactly what the problem is before you knock it down... sorry for the misstatement.
I will go upon the assumption that the people who would need upstart.com are people who need upstart.com. As such you aren't in a position to have a bad attitude anymore than the person who needs help with a flat tire. You might need to "pay him 5 or 10 dollars." to get to where you need to go.
Note that the return to the investors is capped at 15% of their investment annually, and it's automatically deferred when you're un- (or way under-) employed. Using it to raise a huge amount is probably ill advised, but I don't think it's more crazy than a small bank loan, and much better than putting it on a credit card.
I'm interested and horrified at the same time. This can get really ugly. At least when people invest in your company, if you fail you can file for bankruptcy, liquidate assets, etc... But when you're the one being invested in, that's a 10 year lock in. That's a 10 year additional TAX that you'll be paying on your income. Upon failure you can't liquidate yourself, you have to wait it out. A business (LLC, S Corp, C Corp) is at least separate from its owner. With UpStart, YOU are the business. And that's a bit too close for comfort.
Sounds like a deal with the devil type of contract, only for desperate entrepreneurs. It's hard enough letting go of your company's equity, I can't imagine what it's like to not own 100% of myself.
This sounds a lot like Lumni, which has been popular in South America and is coming to the US:
<< Sneider’s dream was to attend college so he could become a nurse and serve his community. To do so, he needed $8,500 — a sum that is close to the average annual income in Colombia. The problem is that financial aid and student loans are far less abundant in Colombia than they are in the United States. Sneider, who was unable to provide collateral or a cosigner, had little hope of getting a loan from a traditional lender.
Here’s the deal that Lumni struck with him: In exchange for $8,530 in financing, Sneider agreed to repay 14 percent of his salary for 118 months after he graduated. At that point, regardless of how much he has paid, his obligation terminates. Although this might sound similar to a loan, an “income contingent” repayment plan like this is far less risky for a low-income student like Sneider. >>
Enzi is doing something similar, over a longer time period:
<< Enzi, another start-up, has just put students from India and Iran through Stanford University; they are paying investors up to 6% of their income for five years. The big challenge is to come up with enforceable contracts, says Ashni Mohnot, Enzi's founder. Millions of poor would-be students could benefit. >>
This program can be very dangerous if you're a woman and your "investor" is a male. I can see all types of exploitation going on. As a lawyer I also know that this type of program may be illegal since it is akin to indentured servitude or slavery. I would be curious to know what the males in here would think if their girlfriend or sister had a dirty old man pouring over her tax returns and demanding she make payments. There's a reason we have banks as intermediaries to make loans, hopefully no women are dumb enough to use this.
EDIT: Another issue is that such an investment would be considered an unsecured loan and could be discharged in bankruptcy. I would take the "investment" and then declare bankruptcy and have the debt wiped out. Student loans have bankruptcy immunity which is why 18 year olds can take out thousands in loans. No intelligent investor would give an 20 year old a $30,000 in unsecured loans. You cannot write "bankruptcy immunity" into a contract either because it can only be granted by from Congress.
This is a very interesting and negative way to look at it. Male-Female (and vice-versa!)exploitation is illegal no matter the situation and automatically going to such mindset ("dirty old man") says more about you than the program; everyone of their investors is accredited and, as such, must have a net worth over $1mil, they're not randoms picked off the street. If you look at their current backers, they work for MIT, Google, or other such prestigious companies. I would be willing to bet they have a vetting process complete with background for their backers as well as their upstarts. But as I mentioned before, I have a call with them scheduled for this Thursday, so I'll let you know the details.
I agree that it's low risk, but I don't think you can discount it completely. We have had public cases of high net worth individuals and people from prestigious companies doing immoral things (eg Kleiner Perkins, HP).
Point well made, but that risk is present in almost all circumstances where you are working for someone else (whether it's a traditional job and your boss makes suggestive comments/moves, or a client who insinuates they will give you more favorable terms if you do certain things, or a vc who will fund your idea/company if etc...). I would argue that the risk for a high net work individual is much higher b/c they have more to loose, so they would be less likely to do these things. Or maybe they're just better at getting away with it...
It's probably not dischargeable in bankruptcy; liens on property one hasn't yet acquired (i.e., income) can't be discharged because they don't exist at the time of the bankruptcy.
Interesting. Over the years, I've often played with the idea of letting someone invest in 'me' vs. my businesses. Here's why: if I take investment for a company, I have a conflict of interest with my investor. He/she wants the company to succeed, I want me to succeed and that could happen outside the company.
My style of doing business is very diversified. At any point I'm trying two or three different things, and retaining flexibility is an absolute priority. I need to be able to ditch business A and focus on business B whenever I see fir. This pretty much rules out regular investments because it leaves me too committed for my own good.
Another thought: I'd like to use such a platform as both a backer and a mentor. I'd like to back people who are an order of magnitude less successful than me, and get backing from people who are an order of magnitude more successful than me.
I realize what's right for one isn't necessarily right for all, but to my mind this is a recipe for trouble. Especially in light of multiple endorsements that read "Owing so much in student loans, I wouldn't be able to pursue my dreams if it weren't for this investment."
Move back home (if it's an option) and spend a year or two working 9-5 until you can finance your dreams with no strings attached. There are countless mentors who will help you find your way, and it won't require a stake in your future earnings to get where you want to go.
2. For the right $$$ I'd still do this today even post college with a good salary.
Two benefits that would help me even today: cash now is better than cash in the future & personal relationship with a mentor who is fiscally tied to you for 10 years.
I take it back. I would definately do this now. Not only do I get a mentor, but one fiscally motivated to help me.
wasd,
Thanks for your interest in Upstart! Upstart is currently only available on a limited number of campuses, and unfortunately University of California-Berkeley is not a part of the program at this time. We are running a limited pilot at Arizona State University, Dartmouth, Rhode Island School of Design, University of Michigan and University of Washington. Your interest will be crucial in helping us decide where we should go next!
We will let you know as soon as we open the Upstart network up to more campuses, including yours.
Jeff, Team Upstart
EDIT:
I vaguely remembered this being posted before. Its been up a few times in the last 6 days without much discussion and here is a larger discussion from 4 months ago:
http://news.ycombinator.com/item?id=3718771