Unlike traditional debt, selling a percentage of future earnings can lead to predatory lending lawsuits, as seen with Fernando Tatis. He received $2 million for 10% of future earnings as a teenager, which became a $33 million liability after his mega-contract. This model's high effective cost creates significant legal and reputational risk for funders.

Contrary to popular belief, successful entrepreneurs are not reckless risk-takers. They are experts at systematically eliminating risk. They validate demand before building, structure deals to minimize capital outlay (e.g., leasing planes), and enter markets with weak competition. Their goal is to win with the least possible exposure.

The NIL arms race has created a new financing need for universities themselves. They are now turning to private credit funds for multi-million dollar loans to cover recruiting expenses and six-figure commitment bonuses. These loans are secured by the athletic department's predictable TV revenue, creating a stable, asset-backed lending opportunity.

Despite high earning potential, young athletes are often rejected by conventional private banks. Bank regulations require underwriting based on historical balance sheets, which a 21-year-old lacks. This creates a market gap for specialized lenders who can underwrite based on guaranteed future contract value, not past financial history.

Vested neutralizes non-delivery risk, a major concern in private markets. By funding exercises, they ensure the employee retains a majority of their stock, aligning incentives. Small deal sizes ($50k-$100k) make it economically irrational for an employee to default and ruin their reputation, leading to a 100% delivery rate.

In auctions with uncertain value (like oil leases or even NFL draft picks), the winner is not a random bidder but the one with the most optimistic valuation. This often means the winner has significantly overestimated the item's true worth and is therefore 'cursed' by their victory.

To eliminate counterparty risk with young athletes, specialized lenders establish a direct deposit arrangement with the professional team or university. This structure ensures repayment is automatic and not subject to the athlete's spending habits. The athlete never touches the repayment funds, which go directly from the team to the lender.

To avoid predatory lending accusations and adverse selection, some private credit funds apply a strict "use of funds" screen. They will not fund discretionary lifestyle purchases like jewelry or cars, regardless of the athlete's guaranteed contract value. Instead, they focus on financing career-protecting assets like insurance premiums or real estate.

Hard Numbers agency launched during the COVID pandemic by creating a financial model assuming zero client wins for six months. This worst-case scenario planning provided the confidence to proceed during extreme market uncertainty, proving to be a critical risk mitigation strategy.