Two years ago, Jobs for the Future (JFF), a nonprofit dedicated to assisting low-wage workers in achieving upward mobility, launched a venture arm called JFFVentures to support innovative employment technology.
In a clear indication of its successful launch, JFFVentures has introduced its second fund, JFFVentures Fund II, with a target of $50 million, having already raised $15 million.
The new fund, supported in part by the Autodesk Foundation, the Workday Foundation, and the American Council on Education, will focus on backing founders developing HR, education, and workforce solutions aimed at enhancing economic mobility for workers in middle to low-wage positions, according to JFFVentures Fund managing partner Sabari Raja.
Raja stated to TechCrunch, “We’re aiming to invest in 30 to 35 pre-seed and seed-stage startups, with initial check sizes ranging from $250,000 to $1 million, with the capability to lead rounds.” She added, “We’ll allocate $1 million to $2 million for follow-on investments in companies that are performing exceptionally well financially and in terms of impact.”
JFFVentures Fund II is joining the growing trend of impact-focused venture capital funds in the United States that seek to drive social, economic, and environmental change while generating investment returns. Other notable examples include Collaborative Fund, Third Sphere, and the nonprofit Acumen Fund.
The impact investing sector presents significant opportunities, with the private impact market growing to around $1.2 trillion by the end of 2021, a 63% increase since 2019, as per the Global Impact Investing Network.
However, impact funds encounter challenges that traditional startup investment vehicles may not face. For instance, measuring an investment target’s real-world impacts or progress can be challenging for VCs. Impact funds have historically offered lower returns, according to a 2021 study by Cambridge Associates, and many such funds have limited track records due to the sector’s relative novelty.
To address these challenges, JFFVentures Fund II plans to leverage its connection to the broader JFF community, which includes government, corporate, education, and nonprofit partners. Founders in Fund II will have access to dedicated personnel focused on connecting portfolio companies with experts and networks across the JFF ecosystem.
The primary focus of Fund II is on advancing economic opportunities for underserved and underrepresented populations, including women, disabled individuals, immigrants, aging populations, and communities of color. The fund’s structure and goals are designed to ensure diversity and social impact while also aiming for financial success.
Despite challenges faced by impact venture funds in terms of performance, JFFVentures points to the success of its inaugural fund, with a significant percentage of underrepresented founders successfully raising capital from late-stage investors. The fund’s flexibility to invest a portion outside the U.S. also provides an additional avenue for enhancing returns and impact.
JFFVentures aims to set a standard for nonprofit-private partnerships that drive innovation, impact, and value for entrepreneurs, investors, and beneficiaries alike, with a strong focus on meaningful, measurable outcomes for growth.
