Services & Software aims to be a Kickstarter for college grads

Rather than invest in a company or product, why not invest in a person? Founders of Palo Alto-based Upstart have come up with a system where backers fund people based on their potential.

When Dave Girouard worked at Google, he noticed a pattern. He met a lot of young people early in their careers taking the conservative route -- choosing a stable job in a big company instead of following their dreams, taking risks, and striking out on their own.

So Girouard, Anna Mongayt (also a former Googler), and Thiel fellow Paul Gu launched in 2012. Girouard describes it as a kind of Kickstarter for people. Instead of investing in a company or product, financial backers invest in a person and their potential over time. In return, investors receive a small percentage of that person's income over 10 years.

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Upstart connects investors, called Backers, and recent college graduates, called Upstarts. According to their profiles on the site, Upstarts are using the funds to pay off student loans, start new companies, build prototypes, open stores, launch on-line shows, build studios and expand existing businesses.

It starts with aspiring Upstarts creating a profile. After some vetting, the profile is published and the more than 130 backers can decide who they're going to back. To help investors, Upstart created an algorithm to predict someone's earning potential, mainly based on their academic performance, even including their SAT scores. by CNET

From there, the Upstarts have 60 days to raise a minimum of $10,000. So far, half of the more than 80 Upstarts have been funded; fewer than 10 have failed. To protect the Upstarts, there's a repayment cap of no more than five times what they raised in the first place.

But it's not just for techies. "There are people creating music-related startups. Designers who really want to create a studio and a design studio. There are people doing food- and beverage-type companies," said Girouard.

To make a successful profile, Girouard recommends being specific about your goals, including a photo of yourself working in your chosen field, and including a video so investors can get to know you better. For now, the program is only open to U.S. citizens graduating between 2008-2014.