Recently, websites like Kickstarter, Indiegogo, Pave, Upstart, and Lumni have begun to take off. These sites are using crowdfunding to invest in individuals and help them raise money for their endeavors. While Kickstarter and Indiegogo allow individuals to donate to projects, often in exchange for gifts and freebies once the projects are completed, sites like Pave, Upstart, and Lumni are for investors who seek a return. In either case, young people are flocking to the opportunity to raise funds to increase their human capital, or the sum of their knowledge, skills, and expertise.
Upstart, in particular, has started advertising heavily online, seeking people to sign up as either "prospects," individuals in whom investors can invest, or "backers," who are investors.
Prospects working through Pave, Upstart, or Lumni can raise money in exchange for a limited percent of their post-graduation income. Currently, caps are low, meaning at most a seven percent cut of a prospect's income over a maximum of ten years, but will likely increase if the idea of investing directly in human capital grows in popularity. And grow it should. In fact, young people in Texas, as well as the state's education sector, should take a look at its possibilities.
The possibility of young Texans using a forum for investing in human capital to raise money for higher education is a tremendous opportunity, both at the micro and macro economic levels. And the benefits extend to high school, even before prospects are of age to sign up: If students know that their academic performance has a direct influence on how much investors are willing to pay, they will work harder in school.
Right now, unfortunately, many high school students may feel like there is little incentive to study hard. Even if they do make good grades and get accepted to more expensive colleges and universities, where is the money? Sites like Pave, Upstart, and Lumni, and even Kickstarter and Indiegogo, help solve that dilemma. Now that students know there are avenues to raise tuition money beyond traditional scholarships, won't they be more motivated to perform?
Indeed, the ability to show investors one's stuff is a powerful motivator for early performance. Prospects as young as 18 can sign up, meaning that those high school grades can have a direct link to lucrative offers. Many teenagers who won't study over the threat of not getting into a "good" college may finally crack open the textbooks when they can see clear financial rewards.
As an Economics teacher, I had a student ask me the other day whether or not we could invest in people just like we invest in corporations. When I told him that such possibilities did exist, his eyes lit up. Students were happy and excited to know that there were now forums which seemed more fair at rewarding their knowledge, skills, abilities, and ambitions.
They wanted to show investors their mettle and drive.