A year ago, Dave Girouard left his position as the president of Google Enterprise to start a new company, Upstart, that allows users (mostly recent college graduates) to raise money for the pursuit of entrepreneurial goals — they pay their lenders back with a percentage of their income.
And today, lining up with the anniversary of his departure, Girouard is announcing that he has raised $5.9 million in Series A funding.
Upstart previously raised $1.75 million in seed funding. Given his background and the ambition of his idea, it makes sense that Girouard has gotten funding from some big-name investors — the new round was led by previous investor First Round Capital, and it included a bunch of new backers, including Founders Fund, Khosla Ventures, Collaborative Fund, Google executive chairman Eric Schmidt, Salesforce founder and CEO Marc Benioff, and IronPort co-founder Scott Banister.
The company is also announcing that Kiva co-founder Jessica Jackley (currently a venture partner at the Collaborative Fund) and former Nebraska governor and senator Bob Kerrey have signed on as advisors.
When Upstart was announced in August, Girouard told me that he wanted to address a “misallocation of capital in our economy” — the fact that big companies will spend lots of money to recruit college graduates, but those graduates can’t get any money themselves to pursue their dreams (which, to be clear, don’t have to involve launching a tech startup).
So Upstart aims to give those graduates access to both funding and mentorship. And since the repayment amount is pegged as a percentage of income (and there are other repayment waivers and caps), it’s structured to accommodate both lean years and windfalls.
Since the launch, Upstart says 83 “upstart” and 135 backer profiles have been published on the site, with 555 unique funding offers (totaling $1.03 million) made. Girouard said he’s particularly pleased that the people being backed are a “fairly diverse group” and not purely “tech-centric.” For example, when I visited the site on Friday, the already-funded “upstarts” featured on the homepage included someone who co-founded a medical apparel company and someone else who wanted to start a self-serve smoothie business.
Beyond just getting more people into the system, Girouard said the next big challenge is building more ways for backers to interact with the people they’ve funded, providing mentorship and help when appropriate.
Girouard said the funding gives him the opportunity to validate the idea, adding, “One by one, we’re dispelling the questions people have about the model.” Not only are people getting funded on the site, but they’ve even started paying that money back — he noted that there’s been “100 percent compliance on repayment thus far” (though he also acknowledged that it’s still very early in the process).