It started out as an informational meeting about a year ago. Yigal Kerszenbaum, who had recently joined a venture capital fund to support startups focused on helping low-skilled workers find jobs, was introducing his work to leaders from a nonprofit that shared a similar focus.
That meeting with Jobs for the Future, which over the past 35-plus years has established a reputation for creating public policies and workforce development programs, proved to be fruitful. Today, JFF, as it is more commonly known, has acquired Kerszenbaum’s Employment Technology Fund.
Kerszenbaum has gone from the sole employee of the fund to becoming part of a 140-person organization. For JFF, it means the addition of an investment arm to further its mission of creating opportunities for all workers to advance their skills.
“At the end of the day, JFF checked off a lot of the boxes we were focused on,” says Kerszenbaum, 39. “Our strategy and our focus are not going to change.”
But some of its investment terms will. Going forward, as part of JFF, the fund may take equity stakes in future portfolio companies, although it may still structure some deals as debt financing, which means recipients repay the principal, with interest, in the future.
Kerszenbaum declined to say how much his fund has invested in companies or how much it has in its budget, but he says the fund has invested an average of $250,000 across seven deals.
The fund also gets a new name: ETF@JFFLabs, and will operate under a new division that JFF created last year. JFFLabs services include identifying and scaling workforce and edtech technology, incubating early stage produces and services and partnering with companies to solve workforce challenges.
Maria Flynn, JFF’s CEO, says the addition of the fund will provide a new way for her nonprofit to bridge public and private sector resources to help workers develop new skills.
What sold her and the JFF board on the fund was that its choice of investees—including CareAcademy, which provides training and career advancement to senior caregivers and home health aides, and PAIRIN, which provides skills measuring services for students and job candidates—aligned with JFF's mission.
“Too many nonprofits are overly skittish about engaging with for-profit entities,” says Flynn, 50. “This was a partnership that made a lot of sense.”
Kerszenbaum hopes the nonprofit can bring more resources to support his portfolio companies. This includes financial resources. In its latest annual financial statement, JFF reported $53.9 million in revenue—$39.7 million from contributions and grants, $13.7 million from program services. It spent $43.5 million.
The Employment Technology Fund formed in 2017 with backing from four foundations—The Joyce Foundation, W.K. Kellogg Foundation, The Rockefeller Foundation and Walmart Foundation. ECMC Foundation later joined with a $1 million investment.
The foundations wanted to support nonprofits and for-profits aimed at low-skilled workers, advocate organizations and prospective employers.
They brought in New Venture Fund as owner, sponsor and operator of the fund, which would issue loans to early-stage companies with the expectation of interest and principal repaid to the fund. The fund closed its first two investments in 2017.
JFFLabs already has 10 employees, and Kerszenbaum plans to hire about four more to help with future investments. He continues to seek companies with some revenue traction and diverse founders and based in locations without a strong venture capital presence.