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Would You Sell A Percentage Of Your Future Income?

I was recently turned on to a site,, that allows people to “raise money in exchange for a small share of their income over 5 or 10 years.”

I love this idea for some people and the idea is really interesting, though I think there may be some downsides to consider as an investor.

Who Upstart Can Help

While many of the upstarts (people looking for others to invest in them) have a business idea they want funding for, there are some upstarts with very different reasons and needs for an upfront payment in exchange for giving up a percentage of their future income (and total payments are capped at a certain amount).

Some would like to pay off student loan debt or pay for their education, while others are looking to train for the Olympics or other athletic endeavors.

How Upstart Works

Each applicant (or upstart, as they are called on the site) creates a profile, and Upstart verifies his or her identity, credentials, and credit status. Then, Upstart assigns each applicant a fybdubg rate, the amount an applicant can raise for each 1% of income share, either for a 5 year or 10 year term.

Upstarts get to choose how much money they want to raise, up to 7% of their future income, with a minimum of $10,000 raised from backers.

Upstart attempts to target an 8% annual return to backers, though clearly there can be a large variance as some are more successful than others.

The Rules For Backers

Backers can invest in increments of $100, and upstarts have the right to choose whether to accept any particular backer. Upstarts provide updates to their backers about their progress, and backers can be involved in the success of the upstarts by giving advice and making introductions. Everyone is involved in the success of the upstart, and everyone is on the same team trying to make money!

Backers must be American accredited investors, which means a minimum of $1 million net worth (excluding primary residence) or a minimum of $200,000 annual income in each of the past two years ($300,000 if married). This clearly limits backers to a small subset of people.

The Future of Upstart

I love the idea of certain individuals getting funding now in return for a small percentage of their income later. If they don’t make much in the future, it doesn’t cost them a lot, and if they are very successful, they share some of that success with those who helped them. And for some of those entrepreneurs who want to start a business, they can get extremely valuable advice and connections, which may be worth even more than the original investment amount.

For backers, I don’t see the same benefits. An 8% target isn’t that impressive (I’ve done better with Lending Club the last few years), and on top of that there will be work to do if you want to get involved in the business the upstarts are doing. This may be best used as a fun way to try to make the world better and help young people who want to grow their business ventures, but as purely an investment platform, I’m not sure it’s the best idea.

I’m sure there will be many success stories, but I’m equally as concerned about those who try to scam the system, similar to what occasionally happens with Lending Club.

What do you think of Upstart? Would you use it as either an upstart or a backer?



  1. I don’t think that I would use it as either for now until it was more proven and came with some statistics on returns. However, its definitely interesting and something to keep an eye on for the future.

  2. Hmm very interesting! I think if you needed funding, it would a way for someone to get it. As long as you weigh the pros and cons, it could be beneficial for someone.

  3. That’s a good idea, if I just have a good fund of money I would definitely try Upstart. There are many financial companies that offered nowadays, but only few of them can be trusted.

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