Lars Stein addresses the challenges faced by students who want to pursue their higher education and who do not receive government financial support in Switzerland and across Europe. Through studienaktie.org, education is an investment rather than a cost burden. With this paradigm shift, Lars promotes a national change in policies for the allocation of public financial support for education.
The New Idea
Lars’ vision is that education is seen as an investment opportunity. He has engineered a selection process that matches private investors and mentors with motivated individuals striving for higher education. His organization, studienaktie.org, facilitates financial support for students through this investor relationship. More importantly, it uses mentoring and coaching to help the investor and investees understand their personal motivations and capacities to contribute to society.
studienaktie.org matches students whom Lars refers to as “aspirants” with mentors and investors through a detailed application procedure focused on self-determination and the aspirant’s long-term goals. Through this intense application and mentoring process, studienaktie.org ensures the aspirant’s develop a nuanced perspective on the purpose of their education. studienaktie.org also approaches investors interested in three particular dimensions of giving: those interested in investing time as mentors, those willing to open up their networks to aspirants, and those wanting to provide the capital to support the aspirants’ education. Financial investors have three options for how to invest in education projects of aspirants based on the investor’s interests and capacities: (i) direct-investment in which the investors own the project due-diligence and selection and personally accompany the aspirant (ii) mandate-investment in which studienaktie.org proposes a selection of appropriate projects and studienaktie.org accompanies the aspirant, and (iii) Co-Investment-Fund in which a donation is made to the non-profit Co-Investment and Stipend-Fund (CIS) of studienaktie.org. The interest remains in the fund is reinvested into new aspirants. studienaktie.org plays a broker role in managing the relationship between investors and students: they search and select for investors and aspirants, make the matches, and act as a bridge in the relationship.
In Switzerland as well as in other European countries, the education system does not fully support students in their education, which results in lost intellectual and creative potential for thousands of young people. In Switzerland, the financial aid allocation for education operates according to the federalist system. As a result, each of the 26 cantons in Switzerland provides grants and loans on an individual basis and therefore the decentralized process often becomes disintegrated. Grants and loans are currently administered based on the student’s age, nationality, financial stability, amount of time spent living in a particular canton, and the type of education he/she seeks to pursue. As a result, cantonal financial support addresses a very specific and often traditional subset of the population. Continuing education degrees are also not often eligible for state support. In addition, the current system fails to support the education of those students who have moved, shifted career paths or pursued an unconventional educational track, born into immigrant or non-citizen families, or from wealthy families that will not pay for education costs. Cultural norms and behavior are becoming more flexible and changing at a faster rate than the traditional canton system. An increasing number of people are not eligible for government financial aid for education.
The current system for financial aid in Switzerland is also difficult to understand and use for most, especially for those from non-academic backgrounds. Many people do not know if they can afford a particular degree or not and then relinquish ambitious and even realistic goals that appear to be too difficult. The current system does not provide the encouragement, appreciation, and transparency that young people need to meet their fullest potential.
In addition to the flaws in the distribution of financial aid in Switzerland, there is no structured means to invest in people beyond what traditional charity or profitable business endeavors can provide. studienaktie.org enables investors increasingly engaged as active citizens, committed to investing in people and society’s future, or simply wanting to be more confident in the long-term impact of their investment, to have the platform and community to do so.
With its program, “Sparking appetite for education,” studienaktie.org targets individuals with the motivation to pursue their education, especially those who are not covered by state funding schemes or the elite stipends offered by some private foundations. Lars’ model is founded on the notion that everyone can attain an education. To reach this goal, Lars creates investment opportunities that support education, and works in cooperation with the government at the cantonal level to set up new processes and regulations that increases the number of students who can access investment support.
studienaktie.org’s coaching and self-selection process begins with an online registration, followed by a phone call with the candidate. It continues with in-depth coaching before the match with the investor and the corresponding mentorship is initiated. Once studienaktie.org sees a fit, they facilitate the match, although the investor may decide to speak with the aspirant about whether he/she would like to continue the process. The investor will then administer a loan, which will be paid back with interest in relation to the student’s salary over a fixed period of time. On average, an aspirant needs between 20,000 and 25,000 Swiss Francs (US$22,300 to $28k) to finance their education, which is typically the financial gap once scholarships or income from part-time jobs are expended.
Investors and aspirants mutually benefit, financially and personally from the relationship. Such an investment enables investors to have a direct, positive impact on the aspirant’s life, which is fulfilling for them individually as well as for the advancement of their fields of interest. At the same time, aspirants and investors have the opportunity to learn from each other, share their thoughts and experiences, and even initiate joint projects. The process is also extremely transparent and personable, which mitigates the confusion that surrounds the existing financial aid system in Switzerland. In general, investors perceive their investment risk with aspirants to be lower than the risk of shares on the stock market, as they have a direct relationship and can actively contribute to their success by giving them advice, opening doors or providing access to interesting jobs. Lars recently passed the Swiss Financial Market Supervisory Authority (FINMA) regulations, an independent supervisory authority, which builds studienaktie.org’s credibility in Switzerland while monitoring of the integrity of their work within the Swiss financial context.
In terms of Lars’ institutional impact, he has recently taken on a role as advisor for the Department of Education and Culture on the cantonal level. Recognizing the potential power of studienaktie.org to influence policymakers for education, Lars has built strong ties with canton-level decision-makers. The government now considers Lars an official partner to bridge the governmental gap in financial support. Thus, when students do not pass the cantonal allocation system, the state encourages them to use studienaktie.org to obtain financial aid. This cooperation with the government quickly scales studienaktie.org’s impact and contributes to a new paradigm of financial aid and investing. In fact, representatives of the Canton Lucerne’s department of education refer to Lars’ work as a paradigm shift in how education and the financing of education is done in Switzerland. In addition to Lucerne, studienaktie’s cantonal partnerships are underway in several other cantons and regions. studienaktie.org plans to collaborate closely with foundations and other cantons in the immediate term to continue to provide a “one-stop-shop” for education financing for aspirants. Lars is building a movement that instills certainty and confidence in the pursuit of education. Education is no longer perceived as a cost burden by institutions and citizens, but rather, an attractive opportunity to invest in the future.
To ensure continued growth and scale, Lars’ model now envisions between three and five investors to be paired with one aspirant. This pairing is intended to be composed of a mix of investors—two direct investors, two mandate investors, and one loan from CIS Fund with an average contract term of four years. studienaktie.org currently receives about 200 requests for financial aid by potential aspirants each year, primarily from Switzerland and other German speaking countries. Based on its dialogue with cantons and Swiss foundations, studienaktie.org is estimating the “market” of potential beneficiaries to be about 10,000 per year in Switzerland alone. Aspirants can be reached quite easily by cooperating with universities, public grant and student loan advisors, and with secondary schools. studienaktie.org aspires to double in size each year, reaching 600 aspirants per year and 2,000 investors in Switzerland by 2015.
Lars has streamlined the growth of studienaktie.org by scaling the pool of investors willing to invest time and money in direct mentoring-relationships. By creating different investment products (mandate investment, direct investment, CIS Fund) Lars creates investment opportunities for an extended target group. In addition, Lars developed different growth initiatives based on engaging the existing network (investors, members, and employees) to build a larger pool of those willing and eager to invest. By reorganizing the mix of investors studienaktie.org now comprised of mandate investors such as high net worth individuals, foundations, and companies that are more likely to invest or co-invest with direct investors on a larger scale. Lars focuses his growth initiatives on three different levels: On a national level, studienaktie.org has launched different growth campaigns such as the “member 3x1” in which existing investors are invited to win at least three new investors from their own social networks. On a regional level, employees of studienaktie.org approach government officials, service clubs, universities, schools, alumni clubs, foundations, and companies in a specific region and invite them to contribute to social development by investing in studienaktie.org. studienaktie.org is confident it is possible to double the aspirant and investor base every year.
studienaktie.org is set up as a hybrid model with a number of different sources for revenue to enable it to spread its impact and sustain its operations and team. Where the core process “loan and mentorship” breaks even, third-party services (e.g. consulting, outsourcing and other forms of cooperation with companies, foundations, and government agencies) generate profit. These profits are used entirely to finance non-profit activities such as perspective workshops at schools and/or coaching for potential aspirants. By 2015, studienaktie.org calculates that this revenue-generating stream will finance 80 to 100 percent of its operational revenues.
The studienaktie model can expand to include other countries quite easily, especially as its alumni network of aspirants grows around the world. In the next year, studienaktie.org will create subsidiaries in Austria and Germany. Once proven effective in German-speaking countries, Lars will scale to other countries over the next three to five years.
Lars was born in western Germany, in one of the least developed regions of the country. Born as the third child, he is the youngest family member. When Lars passed general qualification and became eligible for university entrance, he chose rather to continue with an apprenticeship in logistics in order to gain work experience. At the age of twenty, when he successfully finished his apprenticeship, he received a job offer from the same logistics company to lead a small branch in Germany. Lars gained first-hand experiences and skills in leadership and entrepreneurship at this young age.
After beginning university in 2000, Lars could no longer pay for his studies. Although raised in a non-academic background and family structure, he remained driven and eager to continue his studies in a leading university for economics in Switzerland. Lars saw an opportunity to overcome his financial limitation by “selling” his future income to private investors in order to cover the financial gap needed beyond what his part time job as process consultant could provide. This entrepreneurial approach led to valuable relationships and to a network of individuals who supported him. Lars recognized the potential of this idea to improve the lives of many other students in Switzerland who face a similar situation. Lars founded studienaktie.org to do exactly that. Because of the importance of the personal relationships in his own situation that went far beyond just being able to finance his education, the coaching process and the mentoring opportunity by investors became the driving forces of studienaktie.org.
Lars recognized the value of education as well as the value of investment in education very early. The strong connection between sustainability, leadership and education later became the subject of his PhD. Lars is deeply motivated by building a network of people who also believe that education is fundamentally important and who want to become engaged in developing future talent. The personal side of his vision is that every individual can unfold his or her full potential through his or her educational path.