Two years ago, Jobs for the Future (JFF), a nonprofit dedicated to helping low-wage workers achieve upward mobility, launched JFF Ventures, a venture capital arm to support innovative employment technologies.

JFFVentures today launched its second fund, JFFVentures Fund II, with a target size of $50 million, a move that indicates the offering is well underway. It has raised $15 million to date.

The new fund is funded in part by the Autodesk Foundation, the Workday Foundation and the American Council on Education – The goal of the program is for founders to build human resources, education and workforce solutions that “provide economic mobility to workers in low- to moderate-wage jobs,” said Sabari Raja, managing partner of JFFVentures funds.

“We are looking to invest in 30 to 35 pre-seed and seed-stage startups with initial funding sizes between $250,000 and $1 million and the ability to lead several rounds,” Raja told TechCrunch. “We will set aside $100 Ten thousand to US$2 million for follow-on investments in companies with strong financial and impact performance.”

JFFVentures Fund II joins a growing number of impact-focused venture capital funds across the United States that are committed to driving social, economic and environmental change while earning returns on their investments. Other funds include the Partnership Fund, Third Sector and the nonprofit Acumen Fund.

Impact investing is a huge and expanding opportunity. According to the Global Impact Investing Network, an international think tank, the private impact market grew to approximately US$1.2 trillion by the end of 2021, a 63% increase from 2019.

But impact funds face many challenges not found in traditional startup investment vehicles.

For one, it can be difficult for VC firms to measure the real-world impact or progress of investment goals. Impact funds have historically delivered lower returns, according to a 2021 study by Cambridge Associates. Because the industry is still new, many impact funds have limited track records.

So how does JFFVentures Fund II plan to avoid these pitfalls?

Raja said that while the fund is operationally independent from JFF, JFFVentures Fund II will benefit from the broader JFF community, including its connections with government, corporate, education and nonprofit partners. Fund II founders will be able to hire at least one dedicated person focused on connecting portfolio companies to experts and networks across the JFF ecosystem, Raja added.

“We focus on the journey of workers in low- to moderate-wage jobs, investing in new technologies that provide them with education, access to quality jobs, providing employers with the tools to support their career development and wraparound services to help them outside of work, allowing them to They can thrive at work,” he said. “We have the expertise and experience to leverage a technology-enabled approach to solving critical workforce issues.”

Yigal Kerszenbaum, another managing partner at JFFVentures, said Fund II’s top priority is “economic development for underserved and underrepresented populations.” Kersenbaum cited women, workers with disabilities, immigrants, aging populations and communities of color as examples.

“Diversity is built into the design and DNA of the fund,” Kerszenbaum said. “Five of the six team members are women, most of us are immigrants, and the entire team speaks seven languages. Many of us are first-generation college students. Additionally, our ten-person advisory board is 100% female, many of whom are investors, subject matter experts and operators from diverse backgrounds.”

Many funds fail to achieve their diversification goals. (DEI’s backlash didn’t help.) But Kerszenbaum said Fund II was structured from a legal perspective to ensure it stayed true to its mission.

“We committed in the fund documents that at least 50% of Fund II founders would be considered underrepresented in terms of founder background,” he said. “In addition, portions of the team have been allocated proceeds that will be earned by achieving certain social impact goals, some of which relate to founder diversity.”

The sticking point may be balancing these goals with rewards.

Research from Cambridge Associates in 2021 found that the typical impact venture fund tends to underperform, performing only slightly better than the S&P 500 over a 21-year period. Among the Cambridge study’s cohort, funds in the bottom quartile returned just 2.43% to limited partners.

Kerszenbaum pointed to the performance of JFFVentures’ first fund as proof that Fund II can be successful.

Kerszenbaum said that 65% of the first fund’s 55 founders (84% of whom consider themselves underrepresented in venture capital) have successfully raised money from later-stage investors. JFFVentures also reserves the right to invest up to 20% of the second fund in startups outside the U.S., in contrast to the exclusive investment scope of the first fund, which provides VCs with additional leverage to enhance returns.

“We aspire to be the gold standard for nonprofit and private partnerships that scale innovation and impact and unlock value for entrepreneurs, investors and beneficiaries alike,” said Kerszenbaum. “Our goal is to be the place where entrepreneurs can be The first stop for building at the intersection of innovation and impact, as our added value goes beyond the check to have meaningful, measurable results for growth.”

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