What role did Felipe Vergara play in starting this venture?
Felipe Vergara’s role or involvement in this venture was a social entrepreneur – by each definition provided in Dees’ article1– Vergara played the role of a change agent in the social sector by assembling the Lumni team. As Lumni is the first organization to successfully bring to market the concept of human capital contracts. Lumni is a for-profit venture, which, from the onset set out to seek a positive cash flow at the end of every accounting year. As opposed to traditional student loans that require students to pay back the full loan plus interest payments and fees, Vergara’s innovation of the ‘human capital contract’ only require graduates to pay back a percentage of their income post graduation for a fixed period of time. As far as Lumni’s venture, the difference in income between graduates generally exceeds the initial investment, however Lumni generates a beneficial situation for both investors and students – students gain access to borrow funds for students and investors to participate in the funds. Vergara’s role included bringing scalable solutions to one of today’s greatest challenges – severe income disparity.2 Vergara continues to relentlessly recognize and pursue new opportunities (he expanded Lumni to Columbia, Mexico and U.S. from 150 students to over 1,600 students with a dropout rate of 5% and a default rate below 2%).3
What resources were required?
Resources the venture required were: the opportunity – very low-income students in need of funds to pursue a higher education, dedication of stakeholders to solve the problem, and a commitment from investors to invest in human capital financing in exchange for profit while assisting in solving a social problem.
Why were they needed?
Human capital which is the sum total of skills, abilities, and knowledge available in a society is the driver of economic growth, development, and individual potential. Although in the...