January 12, 2010 | Read Time: 1 minute
Three young social entrepreneurs are taking an unorthodox approach to raising capital to help their ventures grow. They are mortgaging a percentage of their future earnings in exchange for an unrestricted infusion of cash today.
One of the entrepreneurs is Jon Gosier, founder of Appfrica Labs, a technology incubator that offers jobs, mentoring services, and seed capital to East African technology entrepreneurs. He would like to raise $300,000. In return, he is offering 3 percent of his annual salary for the rest of his life.
“A small portion of the funds would simply be used as a ‘cushion’ to help us get by in lean months,” Mr. Gosier says in an interview on the Web site of the Thrust Fund, which the entrepreneurs started to facilitate the deals. “The majority of the cash would be used to replicate our success in Uganda in another African country, likely Malawi.”
The idea of investing directly in entrepreneurs, rather than in their ventures, started with a posting on a blog called The Emergent Fool this fall.
Its application to social enterprise is currently being discussed on Social Edge, a Web site run by the Skoll Foundation.
What do you think? Is this an exciting new model for raising capital? Are there drawbacks to the plan? Other forms of financing the entrepreneurs should consider to grow their enterprises?
