I recently subscribed to the Transcend Network substack. It’s an interesting newsletter about the future of education and work, and this week they posted an overview of Income Sharing Agreements, or ISA’s. These have become very popular and apparently 40% of the current crop of YC companies use some form of ISAs.

ISA’s are a simple funding agreement that provides upfront education (or payment of education fees), in return for a share of future employment income. Lambda School is an ISA that pays for coding school and asks students for their first paycheck of the tech job they landed. They are a great way to align incentives between students and those providing training. One of the reasons they are being used now is because of the global skills gap, which is especially pronounced in the tech industry.

Read more about ISA’s on the Transcend Network’s newsletter here.