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Why investing in humans could be the next safe haven asset class

Crowd of people in Viareggio, Italy
Marco Di Lauro | Getty Images
Crowd of people in Viareggio, Italy

Diverse, adaptable and plentiful: It may seem facetious to reduce human beings to a series of investment characteristics, but, by certain metrics, it's quite easily done… for all 7.5 billion of us.

That's what a growing number of new start-ups seem to think, at least, raising new questions about what the future of investment might look like.

Could you seek to make money from the man on the street?

Investing in people is, of course, nothing new. We've been investing in people as a workforce since the earliest stages of commerce. An investment in a company is often as much a punt on its staff as it is on the product itself.

Indeed, early stage investing relies almost solely on taking a gamble on an entrepreneur's latest idea.

However, the emergence of new companies, which meld peer-to-peer lending with social impact investing, suggest we could be about to enter new investment territory.

A homeless man begs for small change on the streets
Christopher Furlong | Getty Images
A homeless man begs for small change on the streets

Take Prodigy Finance, for example, a border-less fintech start-up which enables investors to provide postgraduate loans to international students for a profit. International students – particularly those from emerging economies, who may not be eligible for a traditional loan – are able to fund their educations, while investors can make regular returns from their investment.

So far, so like social impact investing. However, with no physical assets to speak of, the loan is assessed and approved based purely on human characteristics – namely intelligence.

"Students are assessed on their academic performance and anticipated earning potential," Joel Frisch, head of business development at Prodigy Finance, told CNBC over the phone.

Currently loans are open only to MBA, MPP, law and engineering students, in an effort to guarantee graduate salaries at the upper end of the earnings scale. So far the company has a 99.1 percent loan repayment rate.

"Investors appreciate that there is a combination of social and financial return," Frisch continued, "We give them the opportunity to invest in the future potential of a student."

Graduating Harvard University Law School students
Robert Spencer | Getty Images
Graduating Harvard University Law School students

For Frisch, this marks a departure from traditional investment and a shift towards the way we will look to invest in the future.

"It's the right direction to be going in," he said. "From the perspective of investing in people, I think it's very much the next stage.

"Version one was that concept of investing in socially responsible areas. Version two was looking at supporting the 'good guys'.

"Impact investing 3.0 is where you'll start to see the impact of investing in someone at an individual level.

"It's very transparent. People say there's not enough transparency in finance and I think we're going to see continued movement into this area."

Prodigy Finance does not require any direct relationship between investors and students, although they are invited to network and engage in future business ventures.

It is one of several businesses which aim to link investors with promising individuals via an intermediary or fund, but could it pave the way for direct investments from person to person? Peer-to-peer lending for social improvement?

State park filled with people playing Pokemon Go
Jefta Images | Barcroft Images | Barcroft Media | Getty Images
State park filled with people playing Pokemon Go

Chris Gledhill, founder of British challenger bank Secco, seems to think so. Like Frisch, he sees our approach to investing as having reached its third iteration: One which puts the individual at the forefront.

"It's like Television. First we had the BBC, then Sky, then YouTube. It moved from the state to corporate to individual and I think the same will happen with money and value," Gledhill told CNBC over the phone.

One of Secco's intentions, when it goes through public beta testing this summer, is to enable users to use their own individual digital currency to trade with people in their community.

"The Secco app looks a bit like Pokémon Go and allows you to trade with others and give them credit for certain attributes," said Gledhill. This could range from specific expertise to social skills to fashion sense, and would attach value to non-financial assets, he explained.

Gledhill hopes to expand this concept to allow people to invest in each other. For example, you could take a stake in a homeless person, help them to find a job, and they in turn can then repay the funding, he suggests.

"Now is the time in financial markets where you can get a return on helping people – usually it's about self-interest or screwing people over," he said.

The notion of investing in an individual for financial gain of course invites images of a dystopian future, in which simple good will is a lost concept. However, managed correctly, there is an argument to say that it could promote social cohesion and help pad out ever-diminishing public funding budgets. With a rising population and ever-more pervasive global inequality, it's certainly an asset class with room for growth.

"We're well aware that there are opportunities for this to go bad," noted Gledhill. "But if we can continue with the idea that you're valued in context we can avoid this becoming a nasty thing.

"Perhaps someday, instead of the FTSE 100, we could have top 100 minds."

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