Self IPO: The Pros and Cons of Selling a Portion of your Career
A self IPO lets you sell a portion of your future career earnings for a lump sum today. The same way a company offers a part of its stock/shares through a stock exchange. The question is, would you do it? Are you ready to yield control to strangers, and allow them to scrutinize your daily life decisions?
Before you answer that, read through the pros and cons and learn from people who’ve done it.
Let’s start from the beginning.
What is an IPO?
An initial public offering is a type of transaction through which companies sell a stake in themselves in exchange for cash. IPOs are a popular exit strategy for businesses, helping founders and other investors liquidate their holdings.
Businesses can use the money raised to fund growth and expansion.
A personal IPO works the same way. You exchange a stake in yourself, and any future earnings for upfront cash. While the concept sounds foreign, like indentured servitude, numerous people have done it, with mixed results.
A few platforms exist that facilitate the IPO.
Would you Self-IPO?
People opt to float shares in themselves for a variety of reasons. Paying down student debt loans is one of the dominant reasons. With total student loan debt in the US hovering around the $1.2 trillion mark, it’s easy to see why.
Others do it to fund advanced education, or even as social experiments.
For the latter, the argument is that oversight from interested third parties gives them that extra motivation to succeed.
Benefits of a personal IPO
- Quickly raise money or capital – Personal IPO is a legitimate (though a grey area strategy) to raise some money or capital. The investor is investing in you (as an individual), and your continued ability to succeed in your career and life.On the bright side, you can use the funds to pay down student debt loans, invest in furthering your education, or develop a different skill set.You’ll get the cash upfront. With conditions attached, of course, and get on with your life.
- Incentivize accountability – The majority of people are demotivated or overwhelmed. You set goals but rarely make progress.Knowing that someone else has a vested interest in you gives you the impetus to do better. Failure to hit milestones, just like in listed companies, will devalue your shares and lead to loss of future capital.
- Stepping stone to more significant opportunities – A personal IPO might develop into something bigger. Shareholders, who are experienced investors might invest in your business idea or offer angel/seed funding.You’ll also get invaluable and objective advice on how to navigate life, career, and business. Your shareholders have a financial incentive to see you succeed.
The disadvantages of a self-IPO
- Loss of complete control over your life – Shareholders “own” you. Everything you do has an impact on your perceived financial value. As such, they, technically, can veto some of your choices. Occasionally, they’ll vote on issues that force you to live with a decision you don’t like.
- Unregulated – Personal IPO’s exist in a lacuna of regulation. You float shares in yourself at your peril and discretion. If anything goes wrong, you’re on your own in finding legal redress.
- An expensive way to raise cash – All things considered, private IPOs are a costly way of raising money. You’ll also have that weight of someone else “owning” you. Traditional lines of credit offer a better alternative than giving 7 – 10% of your future earnings, for ten years, to shareholders.
I know it sounds batshit crazy. Yet, people have done it, maybe there are merits.
With millions of people losing their jobs and livelihoods due to the effects of COVID-19, perhaps it’s time we explored alternatives.
If offering a part of your future earnings, for a check now, to survive, and maybe pick up a new skill that will be worth more when a semblance of normalcy returns, would you do it?
Leave your thoughts in the comments section below. I would also love to hear your suggestions on how we solve some of these emerging problems.