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It’s no secret that student debt is a huge issue in the U.S. As college tuition continues to rise, it’s becoming increasingly difficult to pay for school. After exhausting their savings and federal loan options, students are forced to turn to private loans that come with high, inflexible monthly payments -- assuming they even qualify. Most private loans on the market require a credit score, co-signer, or collateral, which can be difficult for students just starting out on their own.
Avenify is transforming the student financing industry by providing students the opportunity to fund their education with an ISA instead of a traditional loan. Students can borrow up to $15,000 per semester, and owe nothing back until they’re employed and making more than $20,000. Unlike a loan, ISAs don’t have a balance or interest owed. Instead, students pledge to share a fixed percentage of their income for a fixed period of time.
As students who’ve been affected by student loans ourselves, we wanted to build financing that was affordable, transparent, interest-free, outcome-based, and incentive-aligned.

A student applies for funding, and sets up their profile. We collect information like school of attendance, degree and major, expected graduation date, resume, and transcript. In addition, we allow students to upload three supporting documents that give our investors a better picture of who they are and what they can accomplish.
Our team reviews the application, and underwrites the ISA with our model. We use thousands of data points to project each student’s earning potential and set the terms. Our standard income shares range between 1-5% for 120 months.
After accepting the terms, the student receives funding. Funding is disbursed directly to the student’s bank account, so they can use the funds to pay for anything, whether it’s tuition, room and board, meals, or supplies.
Once the student leaves school, their payback period begins. Payments start six months after graduation, and are calculated by multiplying their income share by their pre-tax income. They’ll continue making payments until they reach the end of the payback period, or they can opt to pay off their ISA early by paying up to our progressive payback cap.

Avenify provides investors with the opportunity to invest in students and earn a return when they succeed. Investors can invest in a pooled fund of students (individual investments coming soon), and start earning dividends when borrowers begin making payments.
Investors can view information on each student including their GPA, major, degree, and graduation date. For the Spring fund, investors will be able to view a more comprehensive student profile, including short-answer questions and career plans.
Since launching to students in May 2019, Avenify has grown to over 2,000 student signups and processed over 500 applications for funding, from schools including Cornell University, the University of Pennsylvania, and Lambda School. We’re on track to reach 10,000 students and process 2,500 applications in 2020.

We launched to investors in late July and grew organically to over 100 investors in just three weeks. To support the student demand, we’re focused on growing our investor base to 1,000 investors, and are in active conversations with institutions focused on backing ISA programs.
We plan on issuing at least 250 ISAs each semester, averaging $10,000 each.
Before Avenify, a student looking to finance their education with an ISA would have to be attending a university with an ISA program (Purdue University, University of Utah), or a bootcamp that offers ISAs as an alternative to tuition (Lambda School, Flockjay).

Our model allows students to receive the funding they need to pursue their college degrees, with flexible, student-friendly terms. We also serve investors, who can make an impact with their investment, diversify their portfolio, and earn a return.

We take 2% of the amount invested upfront, and 1.5% of all student payments. We’re projecting $100,000 in revenue in 2020 from upfront investor fees.
The market for student loans is huge and continues to grow. While federal loans account for the majority of this market, private companies make up 7.75% of the outstanding balance, and 11% of all student loans disbursed each year.
The price of college is only increasing, making it harder to pay for school, especially for those who don’t qualify for traditional loans. There’s an immediate need for alternative loan solutions, and we believe that Avenify can be a pioneer in this field.
While the ISA space is growing, Avenify is one of only a few consumer ISA companies. Avenify is the only full-stack ISA marketplace, providing a way for borrowers to apply and make payments, and investors to view the funds and back students.

As ISAs become more popular, we expect more direct competitors to enter the space. Because the long-term success of ISAs relies on data, we have a strong early-mover advantage in acquiring data on investor and borrower habits, validating our underwriting model, and improving outcomes for our borrowers.
Over the next 12 months, we’re issuing 500 ISAs, with $5 million in funding from retail and institutional investors. To do this, we’ll be expanding investment opportunities and hiring a VP of Capital Markets, a data scientist, and a marketing manager.
As we collect more data on the performance of our ISAs, and continue to build relationships with institutional lenders, we’ll be able to transition to direct lending, through a debt facility or warehouse line of credit.
We’re building Avenify to be the leader in the consumer ISA space, and student loans are just the beginning.
We've raised $98.5K from a combination of angel investors and early-stage funds excited about building the future of financing. Our investors have a wide range of backgrounds and experiences, from scaling payment operations at Uber, to raising institutional funding for consumer lending platforms, to growing and advising startups like Clearbit and Forge.


We met two years ago at the University of Oklahoma while interning at a student consultancy working with small businesses and startups. As students, we weren’t happy with our financing options. Some of our friends worked multiple jobs to afford school. Others took out huge sums of loans.
We set out to build something better -- something we would want to use. Avenify is built by students, for students.
Justin Potts, CEO
Justin studied at the University of Oklahoma, where he met his co-founder, Timo. He transferred to a business school in San Francisco after a year and a half, and began interning at Product Hunt. After taking a leave of absence from school, Justin left Product Hunt to join Republic full-time.
Timo Sheridan, CTO
Timo was previously a software engineer and team lead at the Center for the Creation of Economic Wealth, a student consultancy program where students work with Oklahoma-based small businesses and startups to develop go-to-market strategies, build financial models, craft their stories, and develop products. He graduated from the University of Oklahoma with a degree in Economics, and minors in Math and Computer Science.
$4,000,000
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20%
If a trigger event for Avenify occurs, the discount provision
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Crowd SAFE
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A SAFE is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date, in connection with a specific event. The Crowd SAFE is a modified SAFE that is better suited for crowdfunding.
$25,000 – $1,070,000
Avenify
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before the deadline.
The maximum amount
Avenify
is willing to raise is
$1.07M.
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Avenify needs to reach their minimum funding goal before the deadline
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Form C
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I invested because I wish I had access to a program like this when I was in college. Sometimes Sallie Mae is not enough and can see this being a way to raise capital while going to school. The more it catches on means success for this company.
Avenify is investing in students who wouldn’t be able to otherwise get an education without ISAs — even if what they study isn’t STEM. I’m investing because Avenify is helping democratize education for all who seek it.
I'm super optimistic about the future of ISAs as an alternative to student loans. Excited to watch Justin & crew build a marketplace that brings value to students and investors alike!
An Income Share Agreement, commonly abbreviated as "ISA," is not a loan or debt instrument. An ISA is a promise to share a percentage of your future income in exchange for funding. For example, a student may borrow $10,000, and in return agree to pay back 3% of their monthly income for the next 120 months or until they reach a payback cap.
ISAs have no interest and no balance due
Unlike loans, ISAs have no interest, and no balance due. By the time a borrower finishes making payments, the amount they paid back may less than, equal to, or greater than the amount they borrowed. In the previous example, if the student makes $50,000 annually, their monthly payments will be $125. At the end of the 120-month payment period, they will have paid back $15,000.
Income-based, so payments are always affordable
Because ISAs are income-based, a borrower's payments drop to $0 if they lose their job or become unemployed. We also know it can be hard to put payments ahead of necessities like rent and food, so they'll only make payments as long as your income is greater than $20,000. If the student with the 3% ISA only makes $30,000 annually, then their monthly payments will be just $75, and at the end of the 120-month payment period, they will have paid back $9,000.
Based on a future potential, not credit performance
While loans are based on things like your credit score, collateral, or co-signers, ISAs are based on future earning potential, making them more accessible and less predatory than loans.
That means we look at a student's profile, estimate their future earning potential and employment prospects, and set the terms based on what we think they can achieve. Terms are tailored to each borrowers' student profile.
Avenify's model targets a 7-9% IRR for our investors, net of our fees.
If an investor invests $10,000, we will collect $200 up-front, and $9,800 will be disbursed to students. Once the student starts making payments, Avenify will collect 1.5% of each payment, and 98.5% of each payment will be returned to investors.
For a student who borrows $9,800 and is expected to earn $60,000 per year initially, with 3.5% salary growth afterwards, their income share would be set at 3.47%. At these terms (and factoring in unemployment and default risk), they would pay back around $22,000 over the course of their 120-month ISA. One-and-a-half percent of those payments, or about $330, would go to Avenify; the remaining $21,670 would be returned to investors.
In this example, with an initial investment of $10,000, a period of 135 months (120-month ISA plus 15-month deferment for studies), and a return to investors of $21,670 (after fees), the IRR for investors would be 7.12%.
The Economist reported that similar ISA funds have seen historical returns in line with Avenify's model.
We have students from a wide variety of backgrounds, enrolled at a variety of schools, and studying a variety of majors. Name a school or field of study and we probably have a student for it! Some of our most popular majors include nursing, mechanical engineering, psychology, computer science, biomedical engineering, and biology.
The average student who applied for funding requested $9,000, completed 60 credit hours to date (incoming junior), and previously borrowed about $3,200 in private loans and $12,100 in federal loans. The average GPA was 2.8.
The average student who received an offer and accepted the terms requested $9,000, completed 108 credit hours to date (incoming senior), and previously borrowed about $3,100 in private loans and $14,300 in federal loans. The average GPA was 3.27.
While most students are eligible to apply for funding on Avenify, we're selective in who we approve to be listed on the platform.
Out of almost 600 applications for Fall 2019 funding, we offered terms to 54 students. 37 accepted the terms.
For our initial funds, we're focused on students within two years of graduating, in high-potential fields of study like nursing, computer science, and engineering, with low levels of other debt.
No. At this time, an investment in a student or students is purely a financial agreement, but we hope to expand our product offering in the future to allow for the ability to provide job recommendations, referrals, and mentorship for borrowers on our platform.
Because ISAs are still a new financing tool in practice, there's limited data available on their performance. By offering individuals the opportunity to invest in ISAs first, we can move quickly to issue ISAs, validate and improve our underwriting model, and gather data on the performance of our ISAs institutional lenders require.
To supplement capital from the marketplace, we're exploring the potential of working with institutions like family offices and hedge funds, who are less risk-averse than institutional lenders.
Yes. Avenify's platform handles everything from applications, to underwriting, to servicing, to investments, to origination, to processing. We've worked closely with our legal team to draft our ISAs, investor agreements, and required disclosures.
By owning the entire pipeline, we're able to iterate more quickly, launch additional products or verticals with little friction, and improve our unit economics per ISA issued.
Terms are customized for each student on our platform. Our proprietary algorithm takes in tens of thousands of data points to project each student’s future income based on their degree type, their major, and a few wild card factors related to their school’s reputation and geography.
After adjusting for various default, non-graduation, and unemployment risks, we set the terms based on our target IRRs, which are chosen for their competitiveness with student loans and their appeal to retail investors.
We’re carefully monitoring developments in ISA legislation, and look forward to regulatory agencies implementing policies that protect students and provide ISA issuers with guidelines to follow.
Avenify is following current best practices for ISA issuers, as outlined in proposed House bill H.R.3145 and proposed Senate bill S.268. We see any potential future regulation as a moat that will strengthen our first-mover advantage in the ISA space.
The lifetime value of an average Bachelor’s degree is $2.8 million, and the difference in lifetime earnings between a college grad and a non-college grad grows every year. In 2002, Bachelor’s degree holders had 75% higher lifetime earnings than those with just a high school diploma. Now, they earn 84% more.
Clearly, the cost of higher education is worth it, so the problem isn’t the value of the education. It’s how traditional lenders are setting the price for students -- a mismatch between credit terms and earning potential. Students receiving incredibly valuable degrees are being given the same terms as comparable students receiving degrees that guarantee lower lifetime earnings.
ISAs can fix this by adjusting terms based on earning potential, offering an entirely new way to evaluate student credit-worthiness.
No! In fact, we've funded a student attending Lambda School. Our model is tailored towards each student's profile, so whether they're attending a traditional college, vocational school, or bootcamp, we can set terms that are right for them.
Similar programs, like Purdue’s, have reported no adverse selection into their ISA program. We set our terms with adverse selection risk in mind; if a student is a good bet, they receive better terms, and vice versa. As a result, we saw student opt-in to our first fund of over 68%, even when those students were in the top 10% of all applicants.
Terms are tailored to each student's profile
Unlike loans, which are fixed payments no matter what you're earning, Avenify's terms are set on a per-borrower basis. We don't think it's fair that someone earning $20,000 has to make the same payments as someone earning $120,000.
With Avenify, students can study what they love without worrying about whether or not they'll be able to afford their payments.
No credit score, collateral, or co-signer required
We don't require a credit score, collateral, or co-signer to apply. We think credit performance is a poor indicator of one's ability to repay, and excludes those who may need financing the most. Instead, we use each student's academic profile to base their terms on their future earning potential.
No interest. Ever.
Avenify's terms don't include any interest. In fact, there's no balance to be repaid at all. Instead, borrowers promise to share a percentage of their future income for a set period of time.
Generous borrower protections and insurance
If a student becomes unemployed or their income drops below $20,000 per year, their payments drop to $0. If they return to school, we'll defer their payments. Additionally, we have a built-in payback cap that ensures students will never pay more than what's reasonable. With Avenify's unique progressive payback cap, borrowers can save money by paying off their ISA early.
While most of our borrowers have taken out a loan before they applied for an ISA, Avenify can replace a private loan entirely. The average student borrows about $30,000 in private loans over four years. With Avenify, students can apply to borrow up to $15,000 per semester.
On average, students who apply for funding on Avenify have only borrowed $3,200 in private loans so far, and are in their last two years of schooling, so it's possible they may never have to take out a private loan again.
Funding is disbursed directly to a student's bank account. This allows the student to finance more than just tuition. They can use the funding for anything they'd like, whether its room and board, books, or a new laptop!
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