Exploration for the Future: $50M Fund Aims to Support Overlooked Entrepreneurs

In a move implying that the launch went well, JFFVentures today unveiled its second fund, JFFVentures Fund II, with a target of $50 million. So how is JFFVentures Fund II planning to avoid these pitfalls? Well, Raja says, while the fund is operationally independent from JFF, JFFVentures Fund II will benefit from the wider JFF community, including its connections with government, corporate, education and nonprofit partners. “We’ve committed in our fund docs that at least 50% of Fund II founders will identify as underrepresented in terms of founder backgrounds,” he said. Kerszenbaum pointed to JFFVentures’ inaugural fund performance as evidence Fund II can succeed, though.

Innovation and impact intersect in a powerful new way with Jobs for the Future’s (JFF) fresh $50 million fund, aimed at investing in underrepresented founders. Two years ago, JFF, a non-profit organization dedicated to helping low-wage workers achieve economic mobility, established a venture arm, JFFVentures, to support cutting-edge employment technology. And today, the organization has announced the launch of its second fund, JFFVentures Fund II, with a target of $50 million, of which $15 million has already been raised.

Managed by JFFVentures Fund, with Sabari Raja at the helm, the new fund will target startups focused on HR, education, and workforce solutions that enable workers in middle to low-wage jobs to rise up the economic ladder. In the words of Raja, “We’re looking to invest in 30 to 35 pre-seed and seed-stage startups, with initial check sizes ranging from $250,000 to $1 million, and the ability to lead rounds.” And in a unique move, the fund plans to set aside $1 million to $2 million for follow-on investments in companies that show promising financial and impact potential.

JFFVentures Fund II joins the growing number of impact-focused VC funds in the United States, which seek to drive social, economic, and environmental change while also earning investment returns. Other notable entities in this space include Collaborative Fund, Third Sphere, and the nonprofit Acumen Fund.

The field of impact investing presents many opportunities, as it continues to expand. According to a report from the Global Impact Investing Network, the private impact market grew to approximately $1.2 trillion by the end of 2021, a substantial 63% increase from 2019.

However, for impact funds like JFFVentures Fund II, there are unique challenges to navigate. Unlike traditional startup investments, measuring real-world impacts and progress can be difficult. Additionally, these funds have historically offered lower returns, as noted in a 2021 study by Cambridge Associates. Plus, many impact funds have limited track records, given the sector’s relative youth.

So what sets JFFVentures Fund II apart and enables it to avoid these potential pitfalls? In the words of Raja, even though the fund operates independently from JFF, it benefits greatly from the larger JFF ecosystem, including its extensive connections with government, corporate, education, and nonprofit partners. Furthermore, portfolio companies in Fund II will have access to dedicated individuals focused on connecting them to experts and networks across the JFF community.

“We’re honed in on the journey of the worker in middle-to-low-wage jobs, investing in novel technologies that provide them the education, access to quality jobs, tools for employers to support their career growth and wrap-around services that help them outside of work so they can thrive at work.”

– Sabari Raja, Managing Partner at JFFVentures Fund

According to Yigal Kerszenbaum, another managing partner at JFFVentures, one of the fund’s top priorities is economic advancement for underserved and underrepresented populations. In his words, “Diversity is embedded into the design and DNA of the fund.” Kerszenbaum highlights the fact that five out of six team members are female, and the majority are immigrants who speak a combined total of seven languages. Many on the team are also the first in their families to attend college. Additionally, the ten-person advisory board is made up entirely of women, most of whom bring diverse backgrounds as investors, subject-matter experts, and operators.

Of course, diversity goals are only effective if they are met. In light of recent backlash against DEI efforts, reaching these goals can prove challenging. However, Kerszenbaum assures that Fund II has been legally structured to stay true to its mission.

“We’ve committed in our fund docs that at least 50% of Fund II founders will identify as underrepresented in terms of founder backgrounds. Additionally, part of the team has been allocated carry, which will be earned by hitting certain social impact goals, some of which are tied to founder diversity.”

– Yigal Kerszenbaum, Managing Partner at JFFVentures Fund

One potential point of contention is balancing these diversity goals with returns. As noted in the Cambridge Associates study, the typical impact venture fund tends to underperform, with the bottom quartile funds returning just 2.43% to limited partners over a 21-year period. However, Kerszenbaum points to the successful performance of JFFVentures’ inaugural fund as evidence that Fund II has the potential to thrive. Out of the 55 founders in the first fund, 84% self-identify as underrepresented in the venture capital space, and 65% have gone on to successfully raise capital from late-stage investors.

Furthermore, JFFVentures Fund II plans to reserve the right to invest up to 20% of its capital in startups outside of the United States, expanding its potential for returns beyond the exclusively domestic scope of its first fund.

In conclusion, Fund II aspires to be the “gold standard” for nonprofit-private partnerships, amplifying innovation and impact while also unlocking value for entrepreneurs, investors, and beneficiaries. In the words of Kerszenbaum, “Our goal is to be the first stop for entrepreneurs building at the intersection of innovation and impact because our value-add beyond the check has meaningful, measurable outcomes towards growth.”

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Zara Khan

Zara Khan is a seasoned investigative journalist with a focus on social justice issues. She has won numerous awards for her groundbreaking reporting and has a reputation for fearlessly exposing wrongdoing.

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