Would You Trade 6% of Your Future Earnings For $600k?

[jeffrey]

Erickson and two other young social entrepreneurs recently made the decision to, in effect, take themselves public. Through an online marketplace called the Thrust Fund, the three have offered up a percentage of their future lifetime earnings in exchange for upfront, undesignated venture funding. Erickson is willing to swap 6 percent of her future lifetime earnings for $600,000. The other two entrepreneurs, Saul Garlick and Jon Gosier, are each offering 3 percent of future earnings for $300,000...

Is This a Smart Way to Get Funding?

[disneysteve]

That doesn't sound like such a good deal for the investor. If the woman earns $100,000/year, 6% would be $6,000. It would take 100 years to recoup the $600,000 upfront investment. Even at $200,000/year, that's still 50 years' worth of income.

[maat55]

Does it include the earnings on the 600k?

[vaporub]

agree with steve

[jIM_Ohio]

Originally Posted by disneysteve

That doesn't sound like such a good deal for the investor. If the woman earns $100,000/year, 6% would be $6,000. It would take 100 years to recoup the $600,000 upfront investment. Even at $200,000/year, that's still 50 years' worth of income.

You think too small LOL

sure at 100k or 200k of income, it does not look like much
but if the person has a good idea, and 500k of income (30k per year) it starts looking like a good ROI

That is not to say I would do such a thing (donate money LOL), but if I were to consider it, I would be looking for a $500k idea, not a 100k idea from the person which received the money.

[disneysteve]

Originally Posted by jIM_Ohio

You think too small LOL

sure at 100k or 200k of income, it does not look like much
but if the person has a good idea, and 500k of income (30k per year) it starts looking like a good ROI

Even at 500K, it would take 20 years to recoup your investment. An income of 250K puts you in the top 1.5% of Americans. 500K puts you in the top fraction of one percent. That's an incredible long shot bet. You could do better taking your money to the casino.

[cicy33]

Where do I sign up!!!???

[Slug]

That's $600k in today's dollars, but salary inflation should help in the recoupment. I assume income will be defined based on their total gross income from their 1040?

[JBinKC]

Amen Steve- You would have to be a fool to take a deal like this. Scam is a better word to describe it.

[maat55]

I believe investing the 600k would earn more per year than my 6%, so yes, I would.

[TheStreetCeo]

Well that's a no brainer for me. I would take the 600k and give up 6% each year. it's like paying for my 401k in advance. If I can keep the interest earned on the 600k over the next 25 years, i'll give 12% for 1.2 million.

[wincrasher]

Obviously a credible business idea has to be proferred and the money is used to implement the idea. You just need a few to hit and you could make some money.