Companies like Kickstarter have made crowd-funding ubiquitous. People can help finance a new building for their favorite restaurant or invest in a new product they want to see manufactured. But now crowd-funding has reached a new level — investing in individuals.
Upstart and Pave allow investors to agree to fund young adults' education or give them a certain amount for a business venture, in exchange for a set amount of the person's salary over a period of time.
What does it say about our economy that young people need to turn to strangers to fund their college or careers? Is it an exciting new investment trend, or does it lock young adults into an exploitative payment plan for decades? And is it even a good deal for investors?
LEARN MORE ABOUT INVESTING IN PEOPLE:
Joel Stein: Why I'm Investing in a 23-Year-Old
... I don't want to buy stock in corporations anymore. I want to invest directly in an individual, preferably a rugged one. Luckily, I can now do this on the Internet. Upstart.com lets people invest in recent college graduates in return for part of their future salary. (Joel Stein, TIME)
The IPO of You and Me: How Normal People Are Becoming Corporations
We've heard a lot about corporate personhood - the idea that, as one former Massachusetts governor put it, "Corporations are people." But there's a new hot concept in the land of personal finance: personal corporatehood, the notion that people can act like corporations. Increasingly, amid record-high stock markets that have rewarded anything with a ticker symbol, normal people are finding new ways to sell stock, lash themselves to investors, and throw themselves at the market's mercy. (New York Magazine)
• A Financial Backer When a Parent's Wallet Isn't an Option
The investors, or backers as they are called, receive a percentage of the young person's income for 10 years, regardless of whether the idea they backed is successful. If the person is paid less than $30,000 a year, the period extends for a year to a maximum of 15 years. If the person tries to avoid repaying the investment — as opposed to earning too little money — that investment converts into a loan with a staggering annual interest rate of 15 percent. (The New York Times)