How We Invest Directly in Individuals

Companies looking to raise capital have options. They can take on debt, sell equity, or a blend. Individuals looking to raise have much more limited options. Until now, individuals have primarily only had access to debt.

We think that’s limiting the potential for entrepreneurship, creativity, and yes, even success in today’s economy.

That’s why we’re taking a different approach.

At Chisos, we invest directly in individuals across industries, including entrepreneurs, athletes, creators and influencers, and artists.

‍

Our approach to investing directly in individuals works essentially by creating a quasi-equity component for individuals. That way, more individuals will be able to access the capital they need to activate and actualize their ideas. This is the real promise of investing in individuals. Some people may describe this as "selling shares in yourself."

In this blog, we’ll quickly outline how ambitious individuals can access capital, benefits for individuals in different industries, why investors should care, and beyond.

What Capital Options Exist for Individuals?

The reality is that capital options for individuals are pretty few and far between. Aspiring individuals who don’t have access to personal savings often turn to personal debt, like high-interest credit cards.

The next best option for some individuals is to ask their friends and family for money - a risky proposition for the friendly investor or lender.

This is shockingly misaligned with the reality of individual demand for capital. 

Consider current estimated capital demand in the U.S. alone: 

• Entrepreneurs: $60B (friends and family stage)
• Creators/artists: $61B
• Athletes: $917M (NIL alone)

While businesses can access either debt or equity-based capital, or even a hybrid of the two, individuals simply don't have those options. (Until now - but more on that later.)

The Impact of the Right Capital, at the Right Moment

It’s something we’ve seen repeatedly: capital can be catalytic if you put it to use at the right moment. 

We’ve all heard stories in the startup community about how early stage startup capital allowed a founder to develop an MVP, bring on that key partner, or close that essential sale.

It’s less well-documented - but no less evident - in other fields.

Athletes 

For example, imagine what an athlete could do with $20K to train for the draft. That could mean:

• A skilled coach that’s laser-focused on improving performance.
• The flexibility to focus on training and recovery, rather than needing to take on a part-time job.
• A sports dietician or personal chef to help craft a custom nutrition plan.
• Access to unique training events that can boost visibility.

And if that high-performing and high-potential athlete - a performance that’s measured in clear KPIs - manages to become a second-round NFL pick, they stand to land a multi-million dollar signing bonus plus a multi-million dollar salary. Not a bad return on investment.

Founders 

Imagine being an early stage founder. You have an idea, you’ve spoken to people who could be your ideal customers, and you’ve begun testing the waters to find out how friendly your market is. All signals are positive. Now, you’ve done the research and know you need $40K to:

• Incorporate your business.
• Hire a marketing consultant to craft your message and build a pitch deck.
• Source offshore developers to build the MVP.
• Give yourself a little runway to quit your day job and focus full-time on fundraising.

But where will you get it? You don’t come from a wealthy family, and your community connections will barely get you to $10K, much less $40K. After all, even Steve Jobs was making hundreds of calls a day from his garage just to land $50K. You’re willing to do it, but shouldn’t there be a better way?

Creators/Makers

Creators (which you may know as influencers) and makers (that is, artists and craftspeople) are the creative engine of the economy. With $10K at the right time, a creator could:

• Hire a video editor to improve the visual quality of their content.
• Invest in marketing and branding efforts, including hiring a branding expert, personal trainer, coach or stylist, to develop their image more effectively.
• Take a short sabbatical from their day job to focus on creating a wealth of quality content.

There are more than 40M professional creators globally. In addition, the creator economy is estimated to be worth more than $100B as of this year - and it’s growing quickly.

High-engagement creators can earn more than $140K per year.

Benefits of "Selling Shares in Yourself"

The key benefit of selling shares in yourself is simple: you get access to capital when you need it, based on your potential to be successful. 

• Flexible: Unlike debt, this approach to capital typically adjusts to fit your lifestyle and earnings.)
• Accessible: Other forms of capital typically don’t exist at this stage, especially for individuals.
• Aligned: Your investors want to see you succeed, and can help along the way. They win when you do.

For ambitious individuals with a dream, and plenty of determination, access to capital can be transformative.  

Benefits of Investing Directly in Individuals

For investors, the benefits of investing directly in individuals are manifold:

• Low Risk: This approach is de-risked, because you’re making an agreement with a person. A person doesn’t dissolve the same way a company or even a career does.
• Unlimited: It’s scalable in a different way, because you’re not forced to go unicorn hunting. 

Investors are betting that the person will succeed, even if their venture doesn’t. 

How Chisos Makes it Easy to Raise Capital as an Individual

Our primary method of investing directly in individuals is via the Custom Income Share Agreement, a novel approach designed by our leadership team. 

Our most common investing approach, the CISA, blends an Income Share Agreement (ISA) with a Standard Agreement for Future Equity (SAFE). These two elements interact, adjusting dynamically to fit your lifestyle, earnings, and business growth. Your agreement will be customized for you and might look different!

The CISA is designed with features like a salary floor, deferred payment periods, and equity clawbacks, to make sure that it’s a good fit for today’s founders. Plus, with our online application and streamlined, tech-enabled review process, you can skip the pain of pitching to Grandma. 

We’re proud to be part of the conversation around investing directly in individuals. Our vision is to enable investment in entrepreneurs, founders, athletes, and creators at scale. We’ve been investing using the CISA for a few years now, and believe that this is how we'll fuel the economy of tomorrow.

Together, we’ll democratize opportunity.