The group of ISAs first repay the investors the advance plus interest.
After the advance plus interest has been paid back, the school and investors share in the ISA payment revenue collected thereafter, with Lambda School getting the majority of that revenue.
In short, Lambda School gets a limited, weighted advance to cover some of its basic costs, invests money of its own, and the remainder is entirely dependent upon outcomes. Because a student’s payment obligation is only governed by the ISA, this creates no risk for students, and the school’s success still completely depends on student success.
It also means we can lower operational costs and do more for students, such as investing in curriculum improvements, expanding our instructor team, improving the immersive (Build Weeks) and Lambda Next programs, hiring more people for career support, and providing additional student services like Modern Health , free of charge. Lastly, this arrangement will not affect the student experience during or after Lambda School.
This is a lot of detail — more than students need to understand — but we’re choosing to be unusually transparent about Lambda School’s finances because students deserve to understand the incentives of their school. This new blueprint not only preserves the incentive alignment we’ve oriented around from day one, but along with the new $ (M financing, it also means we can continue building the school our students deserve.