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The rise of people acting like businesses

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Earlier this year, NFL running back Arian Foster was planning on selling shares of himself. Under the terms of the deal he would earn $10 million in exchange for a 20 percent share of his future earnings. Foster's initial public offering was postponed when Foster suffered a season-ending injury.

But as New York shows in a fascinating piece, individuals acting like corporations -- looking for an infusion of cash in exchange for a share of future profits -- is becoming more common than you might expect.
There are now a handful of companies offering what are called "human capital contracts" or "income-share arrangements" to normal people. These contracts don't involve actual stocks, but they have stocklike characteristics. People who sign up for these programs agree to give a percentage of their income to their financial backers for a period of several years, in exchange for a one-time cash infusion. It's a sort of Kickstarter for people, a crowd-funding platform that provides backers with monthly royalty checks instead of signed T-shirts.
Take Upstart for example. Individuals share there story and experience on the site, along with their future goals and intended use of an investment -- anything from starting a craft beer business to paying off student loans. Then Upstart uses a statistical model to predict the individual's future earnings and determine a funding rate that the individual can raise for every 1 percent of income they share with backers. Individuals are then able to seek out cash infusions from backers in exchange for as much as seven percent of their annual income for five to 10 years.

Like any investment, these aren't without their risk. Individuals must weigh the risk of receiving money upfront in exchange for handing over a cut of their check each month for the next decade, even if that craft beer business does poorly or becomes really successful. But for at least 101 people on Upstart, these are risks worth taking. 

Read more: New York

— By on November 20, 2013, 2:42 PM PST

Tyler Falk

Contributing Editor

Tyler Falk is a freelance journalist based in Washington, D.C. Previously, he was with Smart Growth America and Grist. He holds a degree from Goshen College. Follow him on Twitter. Disclosure