Justin Potts of Avenify
Justin Potts is the co-founder and CEO of Avenify, a platform for students to borrow money for school and pay nothing until they’re employed. You can follow Justin on Twitter @PottsJustin.
Prior to starting Avenify, you worked at Product Hunt & Republic.
Before that, you started a machine learning startup to detect abuse and harassment on the web.
What were some key takeaways from those experiences?
Timing is key. We knew online harassment was a big issue. As kids who grew up on the internet, we saw it happen every day. As the effects became more publicized and abuse on platforms became more widespread, there were calls to platforms from parents, educators, journalists, and consumers to do something about it. That really helped us build momentum in the community and made it much easier to get pilots with companies.
Talk to your customers. From Day One, we started conversations with potential customers. In hindsight, I'm surprised they even took our calls but working with them early meant we knew exactly what we needed to build and focus on to convert them into a paying customer.
Build something meaningful. Startups are really hard, so it's important to find the thing that keeps you going. For me, it's the effect that my startup can have on people's lives, whether that's preventing harassment, or helping them pay for school. I'm a big believer in building businesses that do good and do well. I highly recommend Biz Stone's book, Things a Little Bird Told Me. He touches a lot on the idea of profits with purpose.
What key belief was Avenify founded upon?
We're building a world where anyone, anywhere, can afford an education. We're doing this by offering financing that's affordable, transparent, interest-free, outcome-based, and incentive-aligned.
Which side (students/investors) is your priority right now, why, and what are you doing to acquire them?
We're working on building great experiences for both students and investors, but in terms of acquisition strategies, we're focusing a lot on onboarding new investors and converting existing investors on our platform.
Students are always looking for better, friendlier ways to pay for school, so we always have students signing up. It's about scaling the capital markets side so we have the funding to support the demand.
In our conversations with potential investors, we learned two main things: 1) Investors want the opportunity to build their own portfolios of students, and 2) Investors care a lot about the students, not just the financial returns.
Something we're excited about is the upcoming launch of student profiles and investments in individual students. Student profiles will give students the opportunity to share more about themselves, through short bios and Q&As, and make a more compelling case as to why investors should pick them.
What does a typical student and investor on Avenify look like?
We have a really diverse set of students on Avenify.
We have students from all types of schools, including community colleges, public state schools, HBCUs, Ivy Leagues, and even coding bootcamps like Lambda School, studying everything from computer science, political science, to biomedical engineering, to psychology. You name a school or a major, we probably have it.
On average, students are looking to borrow about $10,000 and generally have low levels of other debt.
Investors are typically individuals excited about alternative assets or ISAs, looking to diversify their portfolio, and make an impact while doing so. Our standard ISA has a 120-month payback period.
Avenify wouldn't be possible without ISA's.
What do most people get wrong about Income Share Agreements, and why have they been more popular in the last two years than before?
A lot of opponents of ISAs often claim they're "predatory" or a form of "indentured servitude."
I can't speak to any other ISA providers, but I know as recent students ourselves, my-co-founder, Timo, and I place a high level of importance on building student-friendly financing.
It's why we tailor each ISA to each student's profile, so they receive terms that work for them. It's why we include qualifications for deferment, like if the student goes back to school or becomes unemployed.
It's why we built in a progressive payback cap, something 100% unique to Avenify that scales with the amount of time the student's been in repayment so they can pay off their ISA early without paying a ridiculous effective rate.
Over the past few years, there's been a lot of movement around ISAs that's helped bring more awareness and credibility to the space.
App Academy, founded in 2012, became the first coding bootcamp to offer ISAs. More recently, Lambda School has risen to prominence, its founder Austen Allred becoming an outspoken evangelist for ISAs and the need for reform in higher education. In 2016, Purdue became the first major university to launch an ISA program, partnering with Vemo Education to service the ISAs.
As ISAs start to become more mainstream, we see an increasing need for a platform like Avenify that allows for students to finance their education with an ISA, regardless of where they attend school or what they want to study, and pair the opportunity with the ability for investors to partake in a new asset class and invest in human potential.
Why is right now the perfect time for Avenify to exist in the world?
The total amount of student debt outstanding is approaching $2 trillion. It's been called a national crises by everyone from Elizabeth Warren to Betsy DeVos. But the student debt crisis doesn’t exist because a college degree isn’t worth it - at least not yet.
The lifetime value of an average Bachelor’s degree is $2.8 million, and the difference in lifetime earnings between a college grad and a non-college grad grows every year. In 2002, Bachelor’s degree holders had 75% higher lifetime earnings than those with just a high school diploma. Now, they earn 84% more.
Clearly, the cost of higher education is worth it, so the problem isn’t the value of the education. It’s how traditional lenders are setting the price for students -- a mismatch between credit terms and earning potential. Students receiving incredibly valuable degrees are being given the same terms as comparable students receiving degrees that guarantee lower lifetime earnings.
