$1 trillion. A number we normally associate with national debt can now also be used to describe student debt, the result of an exponential increase in college tuition. At current, two out of every three college students take out an average of $23,000 in college loans; loans that need to be repaid to the tune of hundreds of dollars a month upon graduation. Add this to post-graduation ‘real-world’ expenses (such as apartment rent) and this is forcing graduating students to find alternative ways to save money, as some choose to move back in with their parents, or earn money, by forgoing their real passions and accepting a job for purely monetary reasons. All of these financial constraints limit choices and dissuade risk-taking.
This is why I'm thrilled to share that our newest investment, Upstart, is looking to tackle this problem with an innovative new approach. Upstart allows graduating students to raise capital in exchange for a modest share of their income over the following 10 years. This means that students finally have the freedom to make the best choices for them, regardless of short-term income flow. As the company writes:
Upstart was founded to help people do what they were meant to do. Many talented college grads take jobs they’re not excited about, rather than following their true passions. Whether constrained by debt or just comforted by traditional career options, too many students take the perceived “safe path.” Upstart aims to provide a modest amount of risk capital - where repayment is tied to the student’s future success - paired with guidance and support from experienced backers, to help grads pursue less traditional and more inspiring careers.
Upstart is launching with five pilot universities in the fall that include Dartmouth College and University of Michigan.
The Upstart team is comprised of a number of ex-Googlers and is being lead by Dave Girouard, who formerly lead all of Google Apps – so if you're a user of Gmail and Google Docs, you're familiar with his work. Dave joins a number of other First Round Companies that are also shaking up the funding and financing landscape like On Deck Capital, BillFloat, AxialMarket, GiveForward, and FundersClub.
Please join me in welcoming Dave and Upstart into the First Round Capital portfolio and Community.