Two years ago, Jobs for the Future (JFF), a nonprofit organization dedicated to supporting the upward mobility of low-wage workers, created JFFVentures, a venture arm that supports innovative employment technologies.
In a move that signals a successful launch, JFFVentures today announced its second fund, JFFVentures Fund II, with a $50 million target. So far, $15 million has been raised.
The new fund, funded in part by the Autodesk Foundation, Workday Foundation, and American Council on Education, will “enable economic mobility for workers in low- and middle-wage jobs,” according to JFFVentures. The company said it will target founders building HR, education, and workforce solutions. Fund Managing Partner Sabari Raja.
“We are looking to invest in 30 to 35 pre-seed and seed-stage startups with initial check sizes between $250,000 and $1 million that have the ability to lead rounds.” Raja told TechCrunch. “We set aside $1 million to $2 million for follow-on investments in companies that are performing well from a financial and impact standpoint.”
JFFVentures Fund II joins a growing number of impact-focused VC funds in the United States that seek to drive social, economic, and environmental change while generating investment returns. Others include the Collaborative Fund, Third Sphere, and the nonprofit Acumen Fund.
Impact investing is a huge and growing opportunity. The private impact market grew to approximately $1.2 trillion at the end of 2021, an increase of 63% from 2019, according to the Global Impact Investing Network, an international think tank.
But impact funds face challenges not experienced by many traditional startup investment vehicles.
First, it can be difficult for VCs to measure the real-world impact and progress of their investments. According to a 2021 study by Cambridge Associates, impact funds have historically provided poor returns. And because the field is so new, many impact funds have a limited track record.
So how does JFFVentures Fund II plan to avoid these pitfalls?
Now, Mr. Raja said that while the fund is operationally independent from JFF, JFF Ventures Fund II will benefit from the broader JFF community, including its connections with government, business, education, and nonprofit partners. I am. Fund II founders will be able to designate at least one dedicated person who will focus on connecting portfolio companies to experts and networks across the JFF ecosystem, Raja added.
“We focus on the journey of workers in low- and medium-wage jobs and provide them with education, access to quality jobs, tools for employers to support their career growth, and comprehensive We’re investing in new technology to deliver services that help them be successful at work and outside of work,” he said. “We have the expertise and experience to solve critical employee problems with a technology-enabled approach.”
Yigal Kelzenbaum, another managing partner at JFFVentures, said Fund II's top priority is “economic development for underserved and underrepresented populations.” Kurzenbaum cited women, disabled workers, immigrants, aging populations, and communities of color as examples.
“Diversity is built into the design and DNA of the fund,” Kazenbaum said. “Five of our six team members are women, we have a majority immigrant population, and our entire team speaks seven languages. Many of us are first-year college students. Our advisory board is 100% women, many of whom are investors, subject matter experts, and executives from diverse backgrounds.”
Many funds set diversity goals but fail to achieve them. (The DEI pushback didn't help.) But Kelsenbaum said Fund II is structured from a legal perspective to ensure it stays true to its mission.
“We have committed in our fund documentation to recognize that at least 50% of Fund II founders are underrepresented in terms of founder background,” he said. “Additionally, some of the teams are assigned carries, which can be earned by achieving certain social impact goals, some of which are tied to founder diversity.”
The challenge may be balancing these goals with returns.
A 2021 study from Cambridge Associates found that typical impact venture funds tend to underperform, outperforming the S&P 500 slightly over a 21-year period. In the cohort studied by Cambridge, the bottom quartile of funds returned just 2.43% to limited partners.
But Kazenbaum pointed to the performance of JFFVentures' first fund as evidence that Fund II can be successful.
According to Kurzenbaum, 65% of the initial fund's 55 founders, 84% of whom identify as underrepresented in the VC space, were successful in raising capital from late-stage investors. It is said that there is. JFFVentures also reserves the right to invest up to 20% of the Second Fund in start-up companies based outside the United States, in contrast to the Second Fund's domestic exclusive privileges, providing VCs with enhanced returns. It gives you additional means.
“We aim to become the gold standard for nonprofit-private partnerships that can amplify innovation and unlock impact and value for entrepreneurs, investors, beneficiaries and others alike.” said Kazenbaum. “Our goal is to be the first home for entrepreneurs building at the intersection of innovation and impact, because our value-add goes beyond the check to provide meaningful, measurable growth for growth. Because it brings great results.”