29A – Venture Concept No. 2

1) Venture Concept

Opportunity

America, and the world, has an aging population. As birth rates in the U.S. decline, we are edging closer and closer to an economy with characteristics similar to countries like Japan, where the average age is 47. In the U.S., the average age is approximately 38, but that ticks higher every year. As our population grows gradually lower, our economy undergoes fundamental changes. We can look at Japan for an example of this sort of change. As the number of retirees rises and the number of workers falls, to things happen. First, selling pressure from retirees keeps stocks lower. Moreover, the country as a whole becomes less productive, as a smaller and smaller portion of the country support the remaining population. How has this worked out in Japan? Very similar to what is described above- Japan’s stock market has been stagnant for decades, the value of their currency has declined and their status on the world stage has shrunk. How does this apply to people in the U.S.? The U.S. is unique in that our population relies on their private savings (401(k), RothIRA, etc) for their retirement more so than other nations where public and private pensioners make up the bulk of retirees. If we take a lesson out of the page of Japan, then we can easily foresee a future where retirees portfolios shrink massively (or fail to keep up with inflation) as our population ages. This creates a huge problem for those seniors who rely on their savings to pay for their long-term care. This is primarily a problem for people who are currently between the ages of 40-60, or are between 10-20 years from needing any long term care. The reason for this is that these macro-economic factors take a long time to materialize.

Innovation

With that in mind, what if you didn’t have to count on your stock portfolio to fund your healthcare long past your golden years. Most Americans don’t have a large portion of their wealth tied up in liquid assets like stocks, bonds or cash. Instead, most Americans have most of their wealth secured in long term fixed assets, such as a house or a small business. This means that many people have access to capital which they are not using. For someone who buy a house, after their house is paid off, they get nothing for that money until the house I sold. With this is mind, the opportunity exists to provide a way for individuals to tap into the value of their long-term fixed assets.

Venture Concept

Here is where my venture concept steps in. I want to take one of seniors biggest weaknesses, and marry It to one of their biggest strengths. Just as you can purchase a fixed annuity or get a loan secured by the equity in your home, I want to provide both these benefits to seniors. A fixed income solution which is funded by  drawing down the equity in an individuals long-term assets, which wont be sold till after their passing. As an example, say an individual requires an estimated 1 million dollars’ worth of care from the time they turn 60, to the time they pass away at 80. They have $600,000 in savings and investments, so they need something to bridge that gap. Say this individual also has a home worth $500,000. They sign a promissory note giving us the deed to the house in exchange for funding the other $40,000 in unfunded liability outstanding. The reason this is important is because not every season want to sell their home in order to access it’s equity. Due to a condition or preferences, they may prefer long term in-home-care. This is made possible by our solution which marries the best in lending with the massive about of equity seniors hold in their homes. Entire classes of people who were once relegated to the worst quality in-long term care will now have access to the best in-home care possible.

2) Feedback Summary

Overwhelmingly, the feedback I received was that the problem I have percieved is not one that many other people think of, even my key customer demographic. This is I believe in part due to the fact that people do not like to think about their imminent decline. As a result, beyond saving into retirement accounts, most people between the ages of 40-60 have not taken the first step to prepare for the future costs associated with long-term care and assisted living.  

3) How did my venture concept change?

Originally, I wanted to offer long-term care services, like remote and travel nursing. This is very different from my current concept which is to focus on the funding side of the problem, and leave the care to the professionals!

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