Founder FAQ

Last updated on January 14, 2023


What is Humanism?

Humanism is a platform that enables equity investment in individuals’ future financial output.

How it works for founders

The founder creates a corporate entity (from here on referred to as a “PersonalCo”) and grants it the ownership of some of their assets and pledges to assign similar assets on a going-forward basis.

  • Including: shares in founded startups, active investments, interests in GPs and Management Companies of funds, digital assets, equity compensation, etc
  • Excluding: real estate, LP interests in funds, investment in mutual funds, and publicly traded stock

Founders initially sell up to 10% of their equity and

  • Can sell more over time
  • Can grant compensatory equity securities (such as stock options and RSUs) to employees/mentors
  • Have the right of first refusal on all transactions and resales
  • Retain substantially complete control
  • Distribute dividends pro-rata to investors to get cash for personal use

Who can participate in Humanism?

At this time, we are looking for US-based founders between the ages of 20 and 41 (born between 1981 and 2002).

We don’t discriminate, but we especially encourage women, immigrants, and people of color to participate. Less than 3% of venture capital money is deployed to female founders, for example, and we would like to change that by investing in more women.

Why do you specify a founder’s age?

Our goal is to reduce the inter-generational wealth gap and support Gen Z and Millennial entrepreneurs. The oldest Millennials were born in 1981 and the youngest Gen Z’ers were born in 2002. Also, we are investing in people over a 15 to 30-year time horizon, so the person needs to be young enough today to fully participate before they retire.

How is my PersonalCo valuation calculated? What information do I need to provide?

We have built a unique, data-driven financial model for tech founder valuation. The model estimates annualized risk-weighted earnings of a founder based on their previous market validations. The valuation of your future economic output is based on your age, income history, previous and current startups, your shares in those companies, all rounds of financing (valuations), and exits. If possible, we ask that you share cap tables of any companies you have or have had ownership in. We then use this information to calculate a probability range of your future financial success.

How much of my PersonalCo can I sell?

We suggest selling between 1% and 10% of shares, but we estimate the most popular amount will be around 5%.

Please explain a sample Humanism agreement in plain English.

You’ll start a company (a “PersonalCo”) and will pledge to hold most of the value you generate over the next 30 years (income, companies, inventions, art, etc.) through that company. Based on demographic data and your particular past, we will estimate the value that your PersonalCo will generate over thirty years. Let’s say your PersonalCo’s valuation is $100M. If you sell a 5% share of your PersonalCo to one or more investors, such as our affiliated fund, then such investor(s) will wire $5M to your PersonalCo’s bank account promptly in exchange for 5% the value of your PersonalCo. As you succeed and generate financial output over the next thirty years, the value of that investment will increase. In no circumstance will you be indebted to Humanism, our affiliated fund or any other investor.


What does the onboarding process entail? What are the steps for incorporating my PersonalCo?

  1. First, you’ll need to incorporate a Delaware c-corp. You can use Clerky or Stripe Atlas, but we can provide all the template documents you need to file directly.
  2. After you incorporate, you’ll get an EIN tax ID.
  3. You can then use your EIN to get a bank account.
  4. Once your bank account is set up, share the wire details (routing and account number) with us over email.
  5. We will provide template financing documents (these are substantially the same documents that our founders use for their own PersonalCo).
  6. Once the financing documents are finalized and executed, the money will be wired to the PersonalCo’s bank account.

Why is my PersonalCo structured as a C-Corp instead of an LLC?

In our experience, investors are more familiar and more comfortable with corporations rather than limited liability companies. Also, limited liability companies can be trickier from an accounting perspective.

How long does the Humanism model agreement last?

There are two options to choose from: 15 years or 30 years.

Can I terminate my Humanism model agreement early?

There is no termination for convenience, but through conversation and mutual understanding the agreements can be terminated. Ultimately, it is up to you and your investors.

What happens at the end of the agreement?

The pledge agreement expires and the company becomes a normal holding company with various assets and the same shareholders. You will lose super voting rights, but can still decide to continue building companies, either out of that holding structure or out of a new one you build.

What can I use the Humanism investment for?

You can use the Humanism investment for anything that you believe helps your PersonalCo. In most cases, the first use of the funding should be for you to support yourself so you can work full-time on your ventures, typically by paying yourself a salary.

If you have student loans, a mortgage, etc. you can use what you pay yourself from the Humanism investment to cover those.

Am I free to use the money for personal reasons? What is the process for doing so? What is considered a personal expense versus a business expense?

Examples of personal expenses include buying a house, paying off prior student debt, paying for health costs, or buying something unrelated to your businesses.

If money is used for personal expenses, this may be treated as a dividend or be otherwise taxable under applicable tax laws. As with any important financial transaction, we strongly urge you to consult a personal tax advisor.

Will I need to file paperwork with Delaware every year?

Yes, your PersonalCo is required to file a simple franchise tax report like any other Delaware corporation.

How do I pay taxes?

Your corporation pays its own taxes. It is not a pass-through entity for tax purposes, which creates an extra layer of taxation, but we believe the benefits outweigh the disadvantages.

To support founders in this process, we can recommend an accountant.

If I want to work for a company, how should my employment agreement be structured?

There are two ways of structuring your working relationships. You can become an employee directly with an employer, earn an income like usual, and then contribute money to your PersonalCo when contractually obligated to. Or, your employer can have a service relationship with your PersonalCo from which you receive dividends on your shares into your personal account. Both situations are taxed and we urge you to consult your personal accountant to figure out the most tax-efficient way to do this.

Option ( 1 ) Employer —> Individual —> PersonalCo

Option ( 2 ) Employer —> PersonalCo —> Individual

Who should I talk to before participating in Humanism?

This is an exciting and important enterprise and we urge you to discuss with people you trust and whose opinion you value, such as any co-founders you might have, spouses or partners with whom you share finances, as well as tax accountants, and legal advisors.


Who are the investors in Humanism and in my PersonalCo?

Humanism Fund I was raised from U.S. accredited investors, which include limited partners, tech founders, and venture capitalists.

Investors can invest in Humanism Fund, which then invests in your PersonalCo. In some cases, Humanism Fund investors can offer to invest specifically and directly in your PersonalCo.

You are also free to raise money from whomever else you’d like (subject to securities and other applicable laws).

Does Humanism or my investor group have voting power over how I spend my time and what I work on?

No. Compared to a conventional venture company, our agreement provides minimal control to investors. Investors have customary information rights (i.e. the right to receive regular financial statements about the company and personal tax returns from the founder) and they get a certain say in liquidation decisions. A founder’s stock gets 100 votes per share versus 1 vote per share for investor stock.

(However, a founder has fiduciary duties, as any company management, and needs to lead the company with these duties in mind.)

What happens if I stop working and never earn much money? What are my fiduciary duties?

Nothing in the Pledge Agreement obligates the Founder to deliver particular levels of return to PersonalCo’s investors. A founder of PersonalCo would owe the same fiduciary duties as any other director of a Delaware corporation, that is a duty of loyalty and a duty of care, each as interpreted under Delaware law.


How is Humanism different from other forms of financing?

Humanism is most similar to an Income Share Agreement (ISA), but different and novel in key ways. With an ISA, a student receives upfront money for college in exchange for a fixed percentage of their future income. The money can only be spent on education, however, and is usually disbursed directly to a limited list of colleges or educational programs. The income-share rate is short-term, capped, and anywhere from 2% to 10% of the student’s future salary.

At Humanism, a person has the freedom and flexibility to invest their money however they choose. We allow for down-time between companies, encourage founders to take more risk, to move on from an idea once it’s clear it won’t work, and to commit to long-term projects without having to maximize for short-term returns.

Over 15-30 years, the impact on current expenditure is low. And we are able to provide these terms because we don’t have a cap.

When an entrepreneur is seeking upfront capital, additional options typically include:

  • VC funding: raise money in a single company in exchange for ownership, typically 7%. Once the company shuts down, the founder would need to raise money again for their new company. VC’s then become the arbiters of what is worthwhile to work on or not.
  • Business loan: Banks and the U.S. Small Business Administration can offer loans in the form of debt, but the money needs to be paid back over time with 7-15% interest.
  • Advances: when a writer receives an advance for writing their book.

People owning the fruits of people’s labor sounds like indentured servitude, slavery, or the worst forms of capitalism. Isn’t this a slippery slope?

Indentured servitude is defined as a form of labor where an individual is under contract to work without a salary to repay someone. In our case, founders receive an upfront investment, make a salary, and keep 90-99% of the money they earn moving forward. No one tells them what to work on and they do not incur any debt.

Our goal is to enable more flexibility, choice, and financial success for our founders than current market options.