Rip Apart My Idea #1: “Invest In Me”

A Theoretical Business – “InvestInMe Inc.”
How absolutely crazy it is that the average 4-year college graduate leaves with an average of $25,000 in debt. 79% of med school graduates have more than $100,000 of student loan debt, with the average a mind-blowing $156,000! This debt disease has been proven harmful by decreasing the amount of future doctors, teachers and inventors who would otherwise complete their schooling and go on to help our population for decades, but choose to be able to afford their food instead.

With tuition consistently rising year after year and laws requiring tuition caps unlikely to pass anytime soon, there is no help in sight. InvestInMe, Inc. plans to change this.

InvestInMe’s mission is to help highly achieving students avoid student debt by allowing outside investor(s) to pay for their schooling in exchange for equity in their future earnings. Similar to valuing a company, the student’s value will be determined by a proprietary algorithm combining aptitude, GPA, social characteristics, direction of study and future profession. The brighter the student and higher future potential salary, the better score received. Just as the students are ranked for risk and value, InvestInMe’s private investors are screened to ensure they will be able to meet all costs in the investment.

Let’s take a look at a potential candidate for InvestInMe

• Amanda Johnson
• 18 years-old
• Highschool GPA of 3.8
• Top 5% of her class
• Member of the basketball and softball teams
• Accepted for next years freshman class at Harvard, pre-med
• Wants to become an Orthopedic surgeon – (median salary of $408,000)
• With family contribution counted, she is facing an estimated $194,000 in debt upon graduation – OUCH!

The Business Model

1. Amanda agrees to sell “equity” in the value of the first 15 years of salary she will earn post-grad, likely being employed as a surgeon.
2. A private investor is matched with Amanda and pays InvestInMe $194,000 for 10% of her post graduate income for 15 years.
3. InvestInMe disperses the $194,000 directly to Harvard as tuition bills are presented.
4. On April 15th of each year following Amanda’s graduation, she submits a copy of her tax return along with a check to InvestInMe for 12% of the prior year’s gross income. (10% for investor, 2% management fee for InvestInMe)
5. On April 30th of each year following Amanda’s graduation, InvestInMe pays the investor annual returns estimated to be $40,800 each year.

Benefits to Everyone

• Amanda graduates med school, following her dreams to become a surgeon, with $0 traditional debt.
• Private investor earns good returns ($40,800 annually X 15 years =  $612,000) with relatively low risk, while helping a student achieve their goals.
• InvestInMe earns $8,160 per year for 15 years ($122,400) plus interest on the $194,000 (the float) before it was fully dispersed to Harvard over the 4+ years.

What Do You Think?

Could this business succeed? Post your feedback and questions below to join the discussion.

Posted in Rip Apart My Idea, Uncategorized