Silicon Valley is the cradle of innovation. It attracts the best and brightest innovators from across the world. But Silicon Valley does not have a monopoly on all great, new ideas. There are brilliant entrepreneurs and exciting companies all over this country and all over the world.
One of the reasons that I started this blog, was to bring more attention to the startups and entrepreneurs that aren't located in Silicon Valley. This is the first post in a series called Out of the Valley where I will do just that, highlighting the whos, whats, whens, wheres, and whys of the most exciting and innovative companies located outside of Silicon Valley and the talented entrepreneurs that lead them.
The first company I will be featuring is Vemo Education.
Who
The founders of Vemo Education are Tonio DeSorrento, Bill Brosseau, and Jeff Weinstein. Tonio serves as the company's CEO and Director. Previous to founding Vemo, Tonio spent time on the legal teams of SoFi and Pave as well as practicing law at Orrick, Herrington & Sutcliffe. Bill serves as Vemo's VP of Higher Education and has extensive experience with the world of student loans having worked at Georgetown University's Office of Student Financial Services. Jeff is Vemo's VP of Credit and Analytics. He is in charge of both Vemo's credit modeling and its operational loan processes. Jeff has a Ph.D. in economics from UC Berkeley and previously worked in Data Science roles at MeasureOne, Pave, and Xerox. This is a team that combines technical and legal know-how with a foundational knowledge of the student loan market.
What
Vemo Education is a provider of income-based student loans through the use of Income Share Agreements or ISAs. An ISA will fund all or a portion of a student's college costs and in return, the student agrees to pay a percentage of their future income back to the school after graduating. The terms of this agreement are variable based on the size of the costs being covered and the type of institution, but the average length of the agreement is 10 years with rates generally between 3-7% of a student's post-graduate income. ISAs also have payment caps for high earners and payment floors where students earning below a certain amount will either have their payments postponed or absolved.
When
Vemo Education was founded in August 2015. The company raised its first seed round in December 2015 with $2 million of backing from investors including University Ventures and Learn Capital. Vemo received two bridge fundings in 2016 and its next major round was a fourth seed round of $7,400,000 lead by University Ventures and NextGen Venture Partners.
Where
Vemo Education is located in the Washington, D.C. suburb of Oakton, Virginia. The greater D.C. metropolitan area is an up-and-coming tech hub. The district is the most educated region in the nation (data as of the 2010 census which is before I moved to the area, make assumptions about what my presence would do to this figure as you will) and has recently been ranked as the No.3 tech market in the country. With incubators like 1776 and venture firms like Revolution, expect to only see more exciting companies and entrepreneurs coming from our nation's Capitol.
Why
Outstanding student loan debt stood at over $1.3 trillion as of December 31, 2016. There is a greater amount of student loan debt outstanding than either credit card debt or auto loans and the delinquency rates of student loan debt is significantly higher than any other kind of household debt. This system is not working. College costs have spiraled out of control, increasing over 2x as fast as the rest of the consumer price index since 1980.
Vemo presents an elegant solution by aligning the risks and incentives of students with those of the institutions they attend. Income Share Agreements give students the flexibility to pursue the sort of education and careers they want, without setting themselves into a massive financial hole to begin their adult lives. Universities benefit from a more diverse community (students can pursue the majors they are passionate about instead of the ones that are more "fiscally responsible") and also share in the potential upside of student success. Speaking from experience as a recent college graduate, systems that are able to achieve this student-university incentive alignment are few and far between. Income-based student loans are not for everyone but provide an innovative and exciting option for students and universities.
Vemo Education is disrupting a massive, stale, and bloated industry; and just may help millions of people avoid debt in the process.
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