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The encounter got Lahoud thinking though, about how individuals might invest in each other in a way that aligns both parties to work toward a successful outcome, rather than making loans that have to be repaid regardless of how well the recipient of Adidas Boost 7 the money does and that give no incentive to the lender to ensure the recipient is successful.
This look at Pave is part of a series on looking at small businesses that are innovating in their areas and starting to get noticed.
"What we're designing is a marketplace," says Bass, who is also chief operating officer for Pave.
"A big motivation for backers has been the opportunity to do well by doing good," Bass says. "This means being part of, and having an impact on someone's entrepreneurial, creative or professional careers. Your backer is fully aligned in your success or failure."
Lahoud, 29, came up with the idea for Pave after a friend asked to borrow some money. The friend wanted to quit his job at an interior design firm and start freelancing, but needed money to live on as he started out. But Lahoud says he was uncomfortable with lending the money and potentially finding himself in the awkward situation of asking a good friend to repay him, regardless of whether the friend was successful as a freelancer.
"There is a different way than borrowing and that is, you take a partner," says Sal Lahoud, co founder and CEO of Pave. "Someone who invests in you and is aligned with you. Prospects can use their funds however they'd like, from paying tuition or student loans to funding a film or starting a business.
A friend in need is an idea, indeed
alternative to costly college loans
It might really be called the anti student loan, and it's essentially what start up company Pave is offering students and young professionals trying to pursue their passions without being burdened by, or relying on, traditional loans.
Eventually though, Lahoud hopes Pave will attract enough backers to allow everyone who applies as a prospect a chance at funding.
"The whole goal of it is to maintain a very close relationship with the prospects on the site and understanding that there Adidas D Rose White
that many backers are attracted more to the idea of sharing their knowledge with a younger generation than by the potential financial return.
Because a prospect can have multiple backers all investing different amounts, the prospect can negotiate a different percentage of their income they will owe to each. Pave then aggregates that into a single amount due each month.
"We have to build a fluid community," Lahoud says. "A fluid platform where, when people come to it, they have a good chance of being funded. You have to curate based on what backers are interested in funding and what prospects want to do."
To increase the chances of creating successful matches of prospects and backers, right now the Pave team filters the applications it gets from prospects and only invites the most compelling ones to create and post full profiles.
The contract isn't completely fee free, though. Pave makes money by taking a 3% fee out of each prospect's total amount raised. A 1.5% servicing fee is charged to backers.
He soon after approached fellow co founder Oren Bass, 35, about expanding the personal investment concept into a business.
"There was basically no positive outcome for me," he says. "If suddenly my friend is in a bad situation and he doesn't know how to pay me back, I feel bad, I'm not going to ask for it back. That's an odd situation."
Pave's behind Adidas Boost 2 Golf Shoes
is financial flexibility," he says. "We don't want to have a situation where the prospect is being chased for payments."
The backers' financial return is based solely on how successful their prospects are or become. It's intentional of the Pave business model to give backers incentive to help their prospects succeed professionally, whether by sharing connections, job opportunities or professional advice.
Pave also sets itself apart from the student loan market by not charging interest on the funds prospects receive. And there's no such thing as a late fee. If a prospect doesn't pay one month or tax documents show at the end of the year that they underpaid their backers, they have until June 30 of that year to make up the payment. And even then Pave will help the prospect by creating a payment plan and waiving fees.
the scenes team of data scientists and economics professors, among others, helps backers and prospects come to an agreement on how much money will change hands by providing income curves and other analytics that show what the prospect can expect to make over the 10 years of the contract, based on factors such as where they went to school, their GPA, and their field of interest.
Lahoud ended up returning to his friend and offered instead to make an investment in him. "I told him, 'I'll do this with you,'" Lahoud says. "'I'll give you money and if things go well, I'll share in the upside and if things go badly, I don't get anything.'"
Recipe for success, not late fees
While the pilot group that launched in December of eight teams of prospects, each of whom have several backers, was chosen and paired personally by the founders, the site will soon be automated. It will allow anyone to submit a profile and a fundraising target, explaining who they are, their goals, and what they hope to do with the money.
Potential backers, who also create profiles, can browse the prospects and contact the ones they'd like to invest in. Prospects who get multiple offers can pick and choose who they want on their "team."
Imagine if your student loan came with a mentor, career advice and professional connections. Oh, and no interest.
And for an age group experiencing unemployment above the national average and paying off tens of thousands of dollars in student loans, Pave may prove an enticing alternative.
And the company has found Adidas All Star Camo
In 2011, the most recent year for which there is data, students graduated with an average of $26,600 in debt, according to the Project on Student Debt. And they're graduating into an economy with a 13.1% unemployment rate for 18 29 year olds, significantly higher than the national rate of 7.9%, according to Labor Department data.
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