In a recent article on CNN Money Rachel Honeth Kim raised $100,000 with the payback being 6% on future earnings based upon her pre-tax income. This is kind of how social security is funded in the US. The workers of today pay for the workers of years past. The future workers then pay for today’s workers retirement.
The company that takes idea of “You Incorporated” and allows you to invest in individuals like you would in companies is Upstart. You are able to invest in recent college graduates future earnings for a set period of time. The Upstart accepts money from “qualified” backers. The backers basically have to have a million dollars. So I’m not qualified – but I hope to be someday.
This setup looks like someone wanted to cut out the middleman whether it was a bank or a credit card. It is a form of lending with direct deposit. It could be looked at as risky for the investor due to the investee can get run over by a truck crossing the street. Of course if the investee does well the investor can do well too; just like investing in an IPO.
For people like Rachel this may be a new way to create your personal brand, which may promote future sales in whatever endeavor she pursues. It goes to show personal integrity and good character will have a greater bearing in the information age then it did in the past.
Only Time will tell if this form of crowd – sourcing will survive or evolve.