Company invests in recent graduates

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Factoring in his major, grades, school and the current job market, UCLA alumnus Daniel Lee is projected to be a good investment.

After Lee graduated from UCLA in 2012, he wanted to start a new company but needed money, so he turned to Upstart – a company that allows individuals to receive funding from other people in exchange for a portion of their future income.

Upstart was launched November 2012 to provide financially unstable graduating students the means to pursue their goals, as well as mentorship and a professional network, said Dave Girouard, the founder and CEO of the company.

The company banks on the idea that the applicants it accepts as “upstarts” will make money in the future. Of the money participants receive from investors, Upstart makes 3 percent.

The amount of money participants pay back to investors varies based on their income. If participants do not make as much money as Upstart projects, then investors can lose some or all of their money.

The idea for Upstart came to Girouard about two years ago when he talked with students who were finishing college and wondering what they should do next.

He said he noticed a recurring trend: Students were taking the “safe jobs” instead of pursuing the careers they truly wanted to avoid risky financial ventures and loan debt.

At that point, Girouard knew he wanted to invest in recent graduates and give them opportunities to be entrepreneurs.

He said graduating students often do not have access to the funds they need to pursue innovative ideas.

“Why can’t someone when they’re 23 or 24 borrow from their future learning potential?” he asked. “Why not start it earlier when it can have a bigger impact on their life?”

For Lee, investors for Upstart gave him a total of about $22,800 in funds in exchange for about 3 percent of his income each year over the next 10 years.

With that money, he launched a startup company that helps individuals find jobs and said he intends to pay back the people who have invested in him. So far, he hasn’t made money off of his company.

The idea for Upstart also stemmed from Girouard’s personal experience working a job he couldn’t wait to escape and feeling trapped by an initially bleak financial state, Girouard said.

After graduating college with more than $10,000 worth of loans, Girouard went into consulting job he didn’t enjoy solely to make money and pay off his debt.

Consulting never excited Girouard though, and he said he left the job to do marketing for Apple after six years.

Girouard now backs multiple people on Upstart, and he said he meets with them regularly to talk about how they’re doing or to give advice.

Ryan Randall, a UCLA alumnus and Upstart’s chief financial officer, was one of the people who decided to “invest” in Lee.

He said he thinks the idea behind Upstart is sound, though some might call it unconventional.

“A lot of people push back with the claim (that Upstart is like) indentured servitude,”

Randall said. “When people are indentured servants, they don’t get money up front.”

Lee said meeting with the people who have invested in him provides him with support, a place to go for help and motivation to pursue his work.

“You feel like you owe them,” he said. “It does push you a little bit harder.”

Correction: Upstart was not founded by a UCLA alumnus.