Vemo Education, the first company to help postsecondary institutions develop, launch, and implement income share agreements (ISAs), announced today that it has recently closed $7.4 million in seed funding. Led by University Ventures and NextGen Venture Partners, with participation from Route 66 Ventures, Third Kind Venture Capital, Haystack Partners, and Task Force X Capital, the funding will allow Vemo Education to hire for growth, accelerate investment in their technology platform, and expand market development.
With student loan debt exceeding $1.4 trillion, defaults skyrocketing, and loan aversion causing too many Americans to underinvest in their higher education or forego college, policymakers, higher education leaders, and students are increasingly focused on income share agreements, a progressive financing alternative to student loans that reduces risk for students and increases college affordability. Vemo Education's platform creates a turnkey solution for colleges and universities to offer ISAs as an alternative to loans. In the 2016-2017 academic year, its first, Vemo Education facilitated $23 million of income share agreements, including Purdue University's "Back a Boiler" program.
"Income share agreements are a progressive financing option to help students pay for their higher education. By replacing high cost, burdensome loans with ISAs, we're going to help eliminate financial barriers to college access and give more Americans a fair shot at the economic mobility and opportunity they deserve," said Tonio DeSorrento, Founder and CEO of Vemo Education. "And by making sure that colleges have skin in the game, we're aligning incentives so that schools are on the hook to provide real value and outcomes for their graduates."
ISAs enable institutions to demonstrate their commitment to student success by sharing both the risk and potential earnings of graduates. ISAs fund students' college costs, and in exchange, students agree to pay a percentage of their future income for a set period of time. Unlike student loans, ISAs have no principal balance or interest. Payments adjust based on a student's income – and only when income is above a minimum income threshold – providing a consumer friendly, flexible pathway to college affordability.
"Income share agreements are based on the value a graduate receives from college, freeing up students to explore career pathways upon graduation without undue financial pressure," said Daniel Pianko, Managing Director of University Ventures. "Vemo is taking the complexity out of ISAs so schools can focus their attention on student success."
"At a time when student loans have become the second-largest source of personal debt in the United States, there is a pressing need for innovative solutions that can transform the way students pay for their education," said Dan Mindus, Managing Partner at NextGen Venture Partners. "Vemo has established itself as a leader in the student finance space by providing dynamic, flexible programs that can adapt to the specific needs of individual institutions and students."
About Vemo Education Vemo Education is a mission driven company working to expand opportunity for all Americans. By offering a thoughtful, consumer friendly alternative to high cost, burdensome student loans, Vemo Education is changing the way we pay for higher education. By partnering with colleges and universities to design and implement income share agreements, we're leveling the playing field so that institutions have skin in the game and are aligned with producing real value and outcomes for their students. Our platform offers a turnkey solution for income share agreements. Learn more at www.vemo.com