What do entrepreneurs Eric Schmidt (Google), Mark Benioff (Salesforce) and Mark Cuban have in common? All have invested in the promising American startup called UpStart.
Created by a team of ex-Google employees, UpStart enables individuals to finance others based on their human potential. This potential is calculated from a variety of indicators, such as education level, academic performance and work history. Those financed can then use the money to repay their credit cards, eliminate debt, enroll in a course, or start a business.
It’s a little like investing in the stock market, yet now you can invest in other people! How does it work? The borrower receives $5000 to $25,000, giving him the resources to boost his personal development. The debt is repaid over time with a fraction of revenues from future salaries. The investor receives an interest rate on the loan, and his profit is also tied to the success of the borrower’s project.
In addition to providing money to achieve dreams, investors can also provide mentoring and assistance to borrowers — often young graduates, or professionals just starting their careers.
A variety of formulas
UpStart is far from the only player interested in this challenge. Other emerging companies, like Pave, Sofi and Lumni, have similar formulas. Californian investor Peter Thiel has come up with an even more radical approach with the Thiel Fellowship, providing $100,000 to 20 people less than 20 years of age to drop out of university and start an innovative, entrepreneurial project in the field of science.
In Toronto, the Next 36 program seeks out the most promising 36 students in Canada and gives them the best resources to start businesses in the field of their choice. Additionally, Nobel Laureate Muhammad Yunus, who will soon visit Montreal for the upcoming C2-MTL conference, also seeks to accelerate individuals as a microcredit pioneer with Grameen Bank, by offering loans to people in Bangladesh so that they can rise above poverty.
In 2014, the concept of venture financing for projects is fairly well known. There are several accelerators and incubators for ideas, such as YCombinator, Techstars and 500 Startups. Many well-known businesses today, such as Airbnb, Dropbox and Reddit, are a result of these programs. In Quebec, there are also accelerators such as Founder Fuel, which has now helped to launch more than 40 businesses, as well as the new Cossette Lab. There are also the Kickstarter, Indiegogo and Angelist platforms, as well as venture capital firms, which provide financing for specific, innovative projects.
That said, the acceleration of individuals — in contrast to that of projects — is a relatively new and interesting frontier. The key aspect of this movement is to support a person to be successful independently from a specific project. It’s therefore taking a risk on an individual based upon his potential, then undertaking to broadly accelerate their learning with financing and/or mentoring — without being able to foresee the exact outcome.
A few examples in Quebec
If the concept seems vague, a number of solid organizations support the idea nonetheless. Here are two new projects in Quebec that venture into this new territory:
Launched very recently by Montreal-based venture capital firm Real Ventures, the Real Fellowship program seeks to match high potential individuals with high potential emerging businesses. The individual works about 3.5 days per week in a growing start-up company, then takes advantage of workshops and mentoring for the other 1.5 days. Prominent Quebec companies like Frank & Oak, Provender, Transit App, Lagoa, Breather and Crew have already agreed to participate. Registration is now open for the summer session.
Then there’s the Founder Institute, launched in Montreal as the first chapter in Canada. It is found in 60 cities and has become the largest accelerator in the world, having already graduated more than 3000 entrepreneurs. The 12-week program aims to help young professionals to start a business. The participants are supported by 25+ entrepreneur mentors. A preliminary psychometric test determines which candidates have the best entrepreneurial attitudes to participate in the program. In contrast to other accelerators, the founders don’t necessarily need to have a specific project in mind, nor a product or a team.
Many other organizations are also looking for ways to accelerate individuals by giving them opportunities to learn and collaborate. Among these, there are Sid Lee’s Bootcamp, bringing together emerging talents in communications and l’École d’Entrepreneurship de Beauce, which supports exceptional entrepreneurs over many years to accelerate their growth.
A new take on an old concept
Come to think of it, these programs somewhat resemble the residencies given to great painters, musicians and researchers since the Renaissance. These residencies often had the goal of accelerating a talented individual while reflecting well on the host organization. In an interesting way, these new programs are at the crossroads of microcredit, participative finance, mentoring and risk capital. They might possibly also represent an evolution in our traditional education system, as they provide more immersive new learning experiences.
In all cases, an old concept seems to have found new life in the world of emerging technology businesses. With the democratization of technology platforms, the acceleration of individuals through financing and mentoring will, for the first time, be accessible not only to a very limited elite group, but to an expanded group of high-potential individuals as well.
[Note: This article was originally published as a guest post here in Infopresse in French.]
Photo: Flickr