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by akg_67
3719 days ago
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Upstart abandoned ISA idea and pivoted to traditional loan products. Has something changed, since Upstart pivoted, to make ISA attractive? What are you doing differently that your ISA offering, compared to Upstart, may succeed? You both are targeting same segment. Upstart has already tried student segment with ISA and that also recently so you will have hard time convincing people that situation is significantly different in 2 years. What are the reasons for relative success of Fantex ISA compared to Upstart ISA? There is something uniquely different between Fantex and Upstart target market for ISA. You need to find target markets that have similar characteristics as Fantex ISA to figure out attractive target markets for your ISA. You might want to contact Dave and Paul at Upstart to investigate their reasons to exit ISA. Also, try reaching out to Mark Cuban. IIRC, he was involved with Upstart too. |
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The regulatory environment, as mentioned in another comment, is still the Wild West out there. Also mentioned is that it matters how you position your offering in the market and how it is structured. For example Lumni is another company that has an intermediary fund which acts as a risk pooling mechanism, thereby tying it more closely to insurance regulation than say, a direct agreement between two individuals would.
Fantex is targeting a different market altogether despite using the same vehicle to do so ("getting a piece of an athlete"). I feel it's unfair to compare the two in the same vein that a mortgage is much different than credit card debt.
While Upstart has left the market, their exiting statement claims they are still optimistic regarding the use of ISAs as a vehicle in education funding.
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In my research of those participating in the student debt market, there are a number of problems I have with existing services out there (but I won't be delving into pros and cons of every single issuer):
Pricing is typically inflexible (5-year, 10-year).
Pricing is not transparent/clear (what does the company make, what does my investor get?, can I lower it in any way?)
Lack of a microfunding structure (like LendingClub). More investors decreases individual student exposure by diversification.
Many don't truly promote/provide a good avenue for the mentorship aspect. The platform is financial services only, get your loan, and never log on again except to repay -- that is not my vision.
Many didn't have great distribution/marketing. Ask your friends if they are aware ISAs exist, I am doubtful many will know. Sure, that may be anecdotal but I assure you many do not know this type of funding is an option to be considered. I believe this to be one of the biggest hurdles in this market that no player has yet captured. One of several campaigns we would run is involving student representatives on campus for information/advertising and client acquisition.
We aim to be a truly accessible and customer centric platform that I don't think any others have yet conquered. This is certainly an undertaking to portray financial concepts to 18 year olds but I think with the proper data, visualizations, and communication pipelines, we can differentiate in this area.
Based on the quote I received from an unnamed competitor, it appears they remain uncompetitive compared to the alternative of student loans.
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Seedu aims to ameliorate these issues. I don't think it is necessarily one of them that caused previous attempts to fail, nor do I think one company is doing all of these things wrong, but rather a combination of all of them. Seedu values flexibility, transparency, and mentorship above all.
Hope this helps. Please follow up if I was unclear anywhere.