Blog

Category: ISA investing

The Income Share Agreement (ISA) as an investment hedge – why is it safer?

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Sep 05, 2019
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ISA investing, Income-share agreements

The ideal investment for a financial investor is one that moves with the market in a good economy and against it (or not change much with it) in a bad one. Finding such an investment is hard. The best that investors can typically do is to invest a portion of their assets that are not very correlated (i.e., move less in tandem with) the market. So that when your other assets are tanking in value, there is something in your portfolio propping up the returns. This is the underlying theoretical...

ISA Investment 101: Resource for ISA Investors

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Jan 08, 2019
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ISA investing

Since Purdue University established its income share agreement (ISA) program in 2016, ISAs are becoming more prominent in higher education. The opening up of this market creates a new asset class opportunity for investors. It also provides a space for impact motivated investors who also want a financial return to invest in education and diversify their portfolios. However, there is very little by way of information for accredited and institutional investors looking to invest in this space. This...

ISA Investment 101: The Basics of Investing in ISAs - The When, How, and Why

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Jan 08, 2019
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ISA investing

    Q: How did ISAs come about? What is their history? Although income share agreements have become more popular in recent years, the idea dates back to the 1950s. Milton Friedman originally proposed the concept of income share agreements in his essay “The Role of Government in Education.” In the essay, he outlines an “equity investment” in which investors can buy a share in an individual’s future earning prospects. In 1971, Yale University became one of...

ISA Investment 101: What Are Income Share Agreements?

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Jan 08, 2019
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ISA investing

What are income share agreements (ISAs), and how are they different from student loans? In simple terms, an income share agreement is an obligation, but not a loan, where the investor receives a fraction of income from a student during the payment term. The investment is a hybrid investment, in the sense that investors do get upside returns for a range of income levels. ISA terms can vary significantly across programs and investors, but there are some common elements. The following are some...

ISA Investment 101: Active Investment and the MentorWorks Approach

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Jan 08, 2019
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ISA investing

The predominant ISA opportunities currently available are passive financial investments. An important aspect of this is that the school shares in the risk of outcomes by participating in the investment. This is certainly a viable argument, and one that we believe. Based on long years of experience by the co-founders of MentorWorks in the higher education environment, however, we believe that there are limits to this effect. Educational institutions want to provide the best possible outcomes for...

ISA Investment 101: Due Diligence

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Jan 08, 2019
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ISA investing

In our time as angel investors, we have conducted due diligence through a relatively extensive process, with multiple checklists, reference checks, expert conversations, and document checks. Christopher Mirabile, Managing Director at Launchpad Venture Group describes due-diligence as an investment process: “Diligence is the fancy word for the process you use as an investor. A good process can help improve your returns.”  Due diligence is very contextual, however. Thankfully, the...

ISA Investment 101: Key Risks in ISA Investing

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Jan 08, 2019
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ISA investing

ISA investing strategy, like any other investment option, has risks. Having invested in early stage companies as angel investors, the co-founders of MentorWorks take risk and risk mitigation very seriously. Our ISA investment risk assessment strategy is similar to some angel investment risk assessment ideas. As an aside, Christopher Mirabile and Ham Lord, Managing Directors at Launchpad Venture Group, have a great article for angel investing risk assessment that we highly recommend. We give full...

ISA Investment 101: How Does Active ISA Investment Compare to Angel/VC Investment?

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Jan 08, 2019
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ISA investing

  There are some parallels between active ISA investing and angel investing. The fund and support approach that MentorWorks promotes is consistent with the angel or VC investing framework. That is, you fund a well-run startup and then you provide expert advice and guidance as well as connections to help the startup do well. The investor then shares in the part of the upside generated from this support. MentorWorks’ career augmented ISA program works along the same dimension. We fund...

ISA Investment 101: Where Do I find ISA Deals to Invest In?

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Jan 08, 2019
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ISA investing

The ISA market, much like angel investment or VC market, does not have a systematic platform to invest through. The one notable exception is Angellist, which started out as a listing platform for early stage startup equity deals.    Many schools are using their own capital to set up ISA programs, and hoping to sell or issue new ISAs after they reach a certain point. However, balance sheet based ISA financing is not a particularly great model for an educational institution with fixed...

Interview: Sabrina Manville is making research on paying for college a breeze

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Apr 30, 2018
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ISA investing

Going to college is a big step in anyone’s life. A college education provides upward social mobility as well as an opportunity to create meaningful contributions to society. While it is clear that the value of a college education is far more than a high school degree, many people don’t fully grasp the gravity of paying for college. In addition to that, there is no real transparent way for students to find out exactly how much they will be spending without applying....

Financial Factors to Consider When Choosing a College

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Apr 06, 2018
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ISA investing, Student loans

As May 1st approaches, many high school students are making a decision about what college to attend. Deciding factors normally include academics, location, and extracurriculars. However, students must make sure they don’t overlook the important financial considerations when making their college choice. Here are four of the most important financial factors to consider: Scholarships When comparing college costs, students should take into account any scholarships or grants. In addition to...

Forbes Profiles the Rise in Income Share Agreements

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Dec 07, 2017
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Income-share agreements, ISA investing

Published by: Forbes Author: Michael Horn Intrigue with new models of student financial aid that encourage innovation in postsecondary education and align the incentives of institutions with the interests of students is growing. In particular, Income Share Agreements (ISAs), which collect a set percentage of a student’s future income as opposed to putting a student into debt, is attracting considerable attention. But ISAs are a nascent vehicle. Although their potential to address the issues of...

Income Share Agreements & Career Mentorship: The Perfect Complement

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Nov 29, 2017
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Career development and mentoring, Income-share agreements, ISA investing

  In our previous blog, we talked about how the features of income share agreements make them a smarter alternative to traditional student loans. On a high level, the key component that makes income share agreements a fantastic alternative is that there is an alignment between you and your financier. If you were to find good and a high paying job, your investors will also do better – plain and simple. This alignment means that your financier has a vested interest in your career...

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