Even hitech takes a village

Social-impact project: Website platform in coordination with various enterprises: "It takes a village": ITAV.org, ITAV.net

Problem: In various parts of the world, many students and young entrepreneurs will make much money in the future, but initially are poor, and must scramble for basics. Some who would otherwise wish to take off a few years to engage in certain studies or work on their start-up idea cannot do so since they must work in order to be able to afford rent, food, medical/dental care etc.

Problem: Inequality is slated to grow with time, especially between those who benefit from hi-tech innovations and those who do not, creating a social problem that is not only economically-based, but also perceptual - for example those in Israel who are intrinsically part of "start-up nation" and those who can only watch it all happen from the sidelines.

Partial-solution: Website to serve as a platform in order to enable "barter/investment" by Local vendors and apartment owners who provide services for free to those whose projects have been accepted at an accelerator, with promise of payment at some multiple if there is success. Free rent, restaurant meals, dental treatment, clothing, even vacations, car rental, groceries, concert tickets, anything at all.

By giving services to various such students or entrepreneurial teams, creating a portfolio, and making good choices based on the risk as indicated by the ratings, they have a good chance of making a profit - and in any case even if they only break even they can in this way feel part of the startup economy, and a functioning part of its ecology.

This platform can start with accelerators and be extended to others who are needful for a certain period but have a good chance of making money later, and have been vetted in some way: for example Medical and Law students at good colleges, perhaps MBA students as well, etc.

Of course these are very expensive programs, but often the students do not have money and borrow, and are needful, just that in this case the return on the investment is an additional financial burden - so maybe it is only for exceptional students in high-paying fields?

To be determined by survey:

• What percent of students and entrepreneurs actually have this need?
• Do they want this type of barter-investment and are they willing to repay at a multiple?
• Who will keep track of their career and which mechanism will decide when and how much they owe, and how will the actual money be transferred to the 'investor'?
• Do the vendors actually have an interest in doing this?
• How savvy will they need to be - can the owner of a restaurant or shoe-store be expected to go online, make a choice and understand the consequences?
• Will it be worth their while instead of using one of the various sites to extend a micro-loan to an unknown project?

........................

Expanded explanation:

Imagine a student-type neighborhood in some city in the world: if it was Jerusalem I'd say eg French Hill, Rassco, Nachlaot/machaneh yehuda, maybe rechavia and other areas: with the following mix: many student live there, including law, medical, dental and MBA students, as well as many young entrepreneurs who are part of some team at a tech accelerator or are part of a VC fund's portfolio. Since many young people in these categories are not wealthy at present, they live in non-upscale enclaves, near small stores and service-providers, and rent rooms or small studios from people who may own an extra apartment or has a few extra rooms.

Crowd-funding/Micro-loans to local students & entrepreneurs by local vendors: the pieces of the puzzle are:

1. students & entrepreneurs who are vetted by the very fact of their being part of a competitive program in a prestigious institution, who need extra cash for small expenses and would be happy to return a multiple of the amount a few years later when they are successful;

2. students & entrepreneurs who are seen about see about in the neighborhood by its vendors, service-providers and shop-keepers, who can thus form an independent opinion of their seriousness and ability;

3. local vendors who are motivated partly for profit but also partly in order to feel that they are taking part in an enterprise which is happening all about them that is other-wise closed off to them: eg a restauranteer in machaneh yehuda giving some free dinners to a team at a nearby accelerator as an investment, but also in order to feel that they are part of "start-up nation"; someone with a room to rent who provides it as an investment; a shoe-store; dental work; travel agent who can offer the team a week in Greece to work together in a fun location as a working-break they cannot otherwise afford to take; etc.

4. an accelerator or school or mechanism which can associate to each student or team a "future-value rating" taking into account the likelihood of success and the likely amount they will earn if they are successful, and the amount of time it will take until they can pay out; and which is willing to offer this mechanism to their students/entrepreneurs, and perhaps even to finance the initial stage, since it will be several years until the first payouts can be made.

5. A website where the recipients can register and indicate what they need and how much they will be willing to return, and the vendors can register and indicate what they are willing to provide, and can see the ratings in order to make decisions, and can create a portfolio of investments; the Site keeps track of the total amount received by any one student or team and ensures it does not rise above some limit;

6. Cooperation of the "Small business authority" of the municipality, the local vendors associations and local chambers of commerce etc to spread awareness among relevant businesses, and to intermediate in the case of any disputes; possibly municipal and other associations involved in assisting start-ups, students, accelerators etc;

7. A legal means of obligating the re-payment at the agreed-upon rate, as well as a means of keeping track of the recipients and determining when they should pay the return - this should be done in association with the accelerator or university, student union etc; a means of deducting some fee for the Site on repayment (plus perhaps some very small user-fee at the outset?).

Scalability: The Site is meant as a platform to coordinate the efforts of all the components, and the main expense will be the initial set up of the Site, investigating the feasibility etc, and it can be geared to any city in the world with a similar situation.

Note that the goods or service which is provided is priced at the amount marked for customers, which already involves some markup for the vendor, so they are getting a premium on their investment. For free rent or free dental services etc, the cost is only loss of revenue, time etc, but its value is counted as the investment principal.

Presumably in poor countries the need of students and entrepreneurs is greater, but on the other hand the vendors may not be able to set aside value in the hope of eventual reward. Perhaps the vendor's expense can be financed by those further up the economic ladder, in which case it becomes a form of micro-loans; perhaps the lender can pay only the cost price, and the difference between the sale-price and the cost to the vendor can be the vendor's part of the investment

Ratings: over time, as investments provide returns, it will be possible to rate institutions etc and a reliability-level can be associated to each valuation, as well as the expected value for each dollar invested in a particular portfolio.

......

Similar in some sense to a TIVA micro-loan, but here it is an investment, and is intended for local people

Issues to resolve

Can be to sponsor med student and get free med care for 2 years, but my intent is more issues like rent etc not tuition.

Objection: Keeping track of goods and services, their worth etc, is difficult, hard to make it sticky, and to manage entire process.

Also: there can be a very individual appraisal of how much to give back, each vendor may want a different amount.

Response: The entrepreneur opens the site on their mobile phone and signs in, and the vendor does the same on their phone or computer, and 'choose' each other; the vendor lists a product or service and its price and the enrtrepreurs sees it on their homepage, and authorizes it. The site provides a standard contract specifying the expected multiples and conditions and timeframe for repayment

Objection: Entrepreneurs are focused on the business they are creating and do not care about the types of expenses listed above, and this is not considered worth the equity.

Response: I don't think of this as equity but rather as giving back $500 for $200 worth of service, and whether or not it will be seen as worth it can only be determined by surveying both sides, the young entrepreneurs and the local vendors.

The legality and responsibility to repay has to be well-anchored.