
UpStart.com: The Startup is you. A new approach to funding and mentorship. - rblion
http://www.upstart.com/
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wasd
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:

<http://news.ycombinator.com/item?id=3718771>

~~~
andygcook
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.

~~~
ljf
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"

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SimianLogic2
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.

~~~
accountoftheday
Reasonable and fundably talented people can easily save the kind of amount
offered while working at said "safe job".

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startupfounder
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...

[1] <http://www.youtube.com/watch?v=WnPoCsTHIYg>

~~~
coopdog
I imagine it'd be pretty amazing for your resume too

'personally backed by Warren Buffet/Steve Wozniak/etc', which alone could also
offset the cost of paying dividends for the right investors

In the flip side, will VC's start demanding these types of arrangements in
case the startup folds but your next one doesn't

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norswap
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.

~~~
Geee
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.

~~~
norswap
OK, thanks for clarifications !

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ChrisNorstrom
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.

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ilaksh
Interesting.. so I guess if you're not a student, you don't qualify as an
'upstart'?

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kryptomaniax
Nice, indentured servitude for the 21st century!

~~~
kruhft
Exactly.

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kanamekun
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. >>

[http://opinionator.blogs.nytimes.com/2011/05/30/instead-
of-s...](http://opinionator.blogs.nytimes.com/2011/05/30/instead-of-student-
loans-investing-in-futures/)

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. >>

<http://www.economist.com/node/16996791>

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kristenlee
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.

~~~
ValG
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.

~~~
capsule_toy
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).

~~~
ValG
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...

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davidkatz
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.

UPDATE: grammar correction

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brianlash
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.

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nateberkopec
That's the nicest looking LaunchRock-y page I've ever seen.

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ckluis
1\. I wish I could have done this.

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.

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hk_kh
Hey, the carousel pictures should have more and bigger smiles. That's what
investors crave.

