Trends Watch: Income Share Agreements
- Feb 4, 2021
EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.
This week, Elana talks with Ki Akrami, CIO, MentorWorks Education Capital.
What is your outlook for alternative investing?
The structure of most alternative investments (i.e., longer duration capital, greater flexibility to pursue non-traditional investments, etc.) is what makes them an evergreen investment opportunity, in my view. Finding those few compelling investments among them and of course the capable teams delivering on the promise of those investments is where I would spend more of my time as an investor.
What are the greatest opportunities you see and why?
We see a tremendous opportunity in up/reskilling the country’s labor force, which is quickly shaping up to be a national priority. Short duration skills-based courses (like learning how to code for example) can be an ideal complement (and for certain individuals, a substitute) to a four-year degree as employers increasingly look for technical skills in their would-be employees. We offer financing options in the form of income share agreements (ISAs) that are more flexible than a loan. Rather than paying back based on a fixed amortization schedule, the student commits to pay back a fixed percentage of their salary for a finite period of time and up to a pre-determined cap. The idea of linking repayment to outcome/success is one that we hope encourages more individuals to pursue that career pivot/upgrade they had been contemplating for some time, but did not given the financial risk.
What about the greatest challenges and why?
While ISAs have been around for a long time, many schools and individuals are not all that familiar with them. Educating our would-be partners on the instrument and helping them determine suitability, or unsuitability for that matter, for their unique circumstance is a task we take seriously.
What keeps you up at night?
We spent the last two years methodically building out a robust infrastructure and have used our own capital to originate ISAs to test and enhance it. Starting late last year, we began to let significantly greater volumes through the system and I am happy to say the results were great but somehow that still keeps me up some nights.
The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.
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Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.
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