Blog

Date Filter: 1/2019

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...

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