Yigal Kerszenbaum: Investing in Workforce Innovation

Work Forces

Yigal Kerszenbaum is the founding managing partner of JFFVentures. JFF Ventures is an impact fund committed to investing in early-stage startups that are building innovative, tech-based solutions for worker economic advancement. In his role, Yigal has overall oversight of JFF’s innovative finance and investment strategy. During our conversation, Yigal explains the impact investing space, provides examples of successful startup ventures, and offers practical advice for aspiring education and workforce tech entrepreneurs.

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Transcript:

Julian Alssid: Welcome to Work Forces, I'm Julian Alssid.

Kaitlin LeMoine: And I'm Kaitlin LeMoine. And we speak with the innovators who shape the future of work and learning.

Julian: Together, we unpack the complex elements of workforce and career preparation and offer practical solutions that can be scaled and sustained.

Kaitlin: Let's dive in. Welcome to this episode of Work Forces. Today we're speaking with Yigal Kerszenbaum. Yigal is the founding managing partner of JFF Ventures. In this role, he has overall oversight of JFF's innovative finance and investment strategy. Prior to joining JFF, Yigal managed an innovative portfolio of impact investments and program related investments at The Rockefeller Foundation and was an investment professional on the private equity team at Developing World Markets. Through these roles, Yigal executed over $120 million in transactions and impact investments across multiple sectors and geographies, including the United States, Latin America, Europe, Sub-Saharan Africa, and Asia. Welcome, Yigal. We are glad you're with us.

Yigal Kerszenbaum: Thank you very much. I'm happy to be here, and I appreciate the kind introduction.

Julian: Yes, welcome to the pod, Yigal. And to kick us off, we'd love to have you tell us about yourself and your work at JFF Ventures.

Yigal: So, I am the managing partner at JFF Ventures. As Kaitlin mentioned, prior to JFF Ventures, I was managing the impact investing and program related investment portfolio at Rockefeller. And I've spent the last 16, 17 years really in the impact investing space, investing in products and tools that create access and opportunity for underserved individuals and communities. That's taken me all over the world and focused in a variety of different sectors, including inclusive finance, access to energy, and a variety of different other spaces as well. In the last six or seven years I've really been focused on U.S. socioeconomic issues and jobs, particularly quality jobs and getting people into those roles and providing them with avenues for economic mobility. This work is deeply personal to myself. I'm an immigrant to this country. My family's from Argentina. I grew up actually in South Africa, Israel, and Argentina, and we’ve bounced around really looking for the American dream. And while it's elusive for many, and I completely understand that, we were fortunate to move here and move into the middle class, and primarily because my parents were able to access good quality jobs. That's really been my personal journey, my lived experience, and the reason why I've spent the vast majority of my career in the intersection of finance and socioeconomic development work.

Julian: So tell us a bit about your work at JFF Ventures. And also, if you could, speak to the alignment of those efforts with Jobs for the Future and Jobs for the Future's North Star goal of helping 75 million people facing systemic barriers to advancement to work in quality jobs in the next 10 years? How does it all tie together?

Yigal: JFF Ventures is an early stage impact fund that invests in pre-seed seed stage companies at the intersection of education, workforce, and future of work, targeting solutions for low to middle income earners and workers. And so what does that mean? It means we're investing in technology and tech-enabled solutions that are helping upscale, train, connect low to middle income earning adults into better jobs and career pathways, as well as investing in products and tools that provide the wraparound support that those individuals may need along their journey. You know, we're unique in this space. There are other fund managers who are investing in education technologies and other fund managers who are investing in future of work. But we're really focused. We're unique I think in two ways. One is we're laser focused on the low to moderate income earning adults segment of the population. And also, as you noted, we are part of a larger organization called Jobs For the Future, which is a national nonprofit which just celebrated its 40 year anniversary and is very much laser focused on the same issues as we are in creating economic mobility for those who have faced systemic barriers historically. And so we are the innovative finance or the impact investing body of work that is part of a larger organization as well,with the same mission and focus. For JFF Ventures, we are currently managing JFF Ventures Fund One, which is a $25 million pre-seed stage fund. Out of that fund, we've made 45 investments to date in the areas that we discussed. And we are currently raising our second fund, which is a target $50 million fund with a similar strategy of investing in technologies that are helping individuals get the skills they need, connect to the employment, and then providing them with the wraparound supports as well.

Kaitlin: It's really interesting to hear about the alignment to JFF's work and really the focus like what makes your firm really focused on these particular like those specific efforts of low to moderate income individuals and the tech end of this really tech-enabled you know product and services. I guess I'm wondering, given that our audience includes individuals involved in education and workforce development that may or may not have exposure to the investment space, can you talk a little bit about who should be looking to play in this space and what do they need to do in order to be successful?

Yigal: You know the way we think about investing, we think about taking a step back. We're looking at the socioeconomic change we want to have or the impact we want to have at a macro level. And we're thinking about the variety of tools we have to influence that. One is obviously policy, another is grant making. But our tool at JFF Ventures is really around investing in market-based solutions. And so we and me personally, who's been in the impact investing space for, you know, 16, 17 years, would love to see others, particularly other nonprofits or other foundations get more involved within the investing space. And I think before you jump heads in, you need to understand that it's a different skill set that's required to understand and underwrite these types of opportunities. These are for profit companies. Once you do invest, you become a shareholder in the company so you do have a fiduciary responsibility that is to a different degree than if you are making a grant or supporting these companies through other philanthropic means. And so you want to make sure that internally you have the right skill sets and capabilities to one, underwrite these opportunities, but to post-investing, support these founders in their journey as they're trying to scale their companies at the end of the day. You may have to hire for those skill sets. You may have them internally, or there are a lot of different advisory firms that will support you in that journey as well. At JFF Ventures, we've been fortunate to have several foundations and other nonprofits invest in our fund as their first foray into impact investing. And so what I'm particularly excited about and been proud about is that, you know, we have a collaborative environment of different funders who are in different parts of their own journey within the impact investing space. And so they're able to learn from each other. They're learning with us. And it's kind of a safe way to dip your toe into investing. And so that's something that we recommend folks look at and think about and the different pros and cons of jumping right in.

Kaitlin: When you think about the portfolio of companies that you've invested in and potential companies you might invest in, what are some of the criteria that you look to when you consider investing in companies that might be early stage in their development.

Yigal: We're looking at four different areas, primarily. One, we're calling education technology. This is career readiness, career technical education, re-skilling, up-skilling. Basically, what are the skills you need to be successful in XYZ career? We're also investing in a second bucket, what we're calling workforce technology. And this is labor marketplaces, job search and placement, and different pathways to advancement. So what are the skills you need? How do you connect to the employment? So, you know, where the three of us may go to LinkedIn to find a job, other individuals have to go through different avenues such as manufacturing workers, hourly workers, etc. Right. And so how are we as JFF Ventures investing in those solutions? The third bucket is HR technology. And this is an evolution from our first fund and HR tech technology is really around meeting employers where they're at. So one of the lessons we learned from our Fund One over the last six years is really employers want to do things such as equitable hiring. They want to support hourly workers transitioning into full-time roles with benefits and things like that, but they don't always have the solutions on hand. So we have to invest and help scale solutions that will then be able to support a variety of enterprise level customers in that transition. And lastly, the last area of focus that we're investing in is what we're calling wraparound supports. And that's really around meeting the holistic needs of workers who require support along that continuum, which could be things like child care benefits, transportation benefits, access to finance, and things like that, that many of us take for granted. And so when you ask me, what are the things that make each one of these companies successful, there's general lessons learned, but then within each bucket, there's obviously more specific or granular things that we're looking for. But generally speaking, we're looking for entrepreneurs who have lived experience in the problem they're trying to solve. So when we're thinking about that or talking about that, we're really looking for entrepreneurs who are closer to the problem. And we think that that helps them better understand the problem, build companies that have better market fit. So we think about product market fit and we think about the time that it takes to get there. That time translates into capital at the end of the day. And so we're looking for entrepreneurs who can get there faster and more efficiently. And we're also looking for founders with that lived experience who, in our belief, gives them that extra bit of grit. And that allows them to stick with the challenges, pursue the problem to a higher degree than maybe a general founder. And this has seemed to work out well for us. We're obviously looking for solutions that can scale. Solutions that that are highly impactful. So that's kind of the first threshold. So we are an impact first fund. So I should have said that maybe out of the gate. But the first screen we have is really around, are you having an impact on the segment of the population? What is the impact? And then from there, we click down, if you will. I'm happy to provide a couple of examples of companies that we've invested in within each of these buckets. And then maybe some of those traits or characteristics of what leads to success will come out of that discussion. And so within the education technology bucket, we invested recently in a company called ChargerHelp!. And ChargerHelp! trains and hires local workforce technicians to maintain, troubleshoot, and repair public electric vehicle charging stations. This is a good example of a career that didn't exist 10 years ago. Right, EV charging stations didn't really exist. So, when we're thinking about jobs for the future, these are the types of things we're looking for. The climate justice and green transition space is a growing high in-demand space. So we know that these jobs will continue in the future. And this particular role, it's a technician role and provides for a level wage with benefits and things like that. So at the end of the day what ChargerHelp! is kind of a vertical solution. And we think that that's pretty interesting in these niche spaces. So they're helping to train individuals, certify them and then hire them or place them into EV technician roles and paying a livable wage as they do that. And so that's an interesting and exciting company that we've recently invested in within the education technology space. We've invested in a company called Anthill. And so Anthill is using AI and machine learning to better communicate with deskless workers. So I don't remember the exact stat, but as many of us know, like a lot of workers, a significant portion of workers in the US don’t sit behind a desk and don't stare at a computer all day long, but they're working in machinery, they're doing hourly jobs. And how are companies effectively communicating with those individuals? How are they giving those individuals opportunities to upscale train? How are they giving those individuals benefits or information on the benefits they have and things like that? And so, Anthill has devised a solution to do that at scale in an efficient and high-impact way. And so, companies and other large entities really love that solution for those purposes. But you get the sense that each one of these examples on their own has a really interesting impact, can scale and is serving this target demographic.

Julian: Given that so many of our listeners are people who are in the public sector, the nonprofit sector, the education sector, you know, a lot of this is new to them. And part of what's so interesting about your model to me is that you're like this embed, this, you know, this business embed in a big nonprofit. And even with all the funders that are investing, that are making, sort of dipping their toes into this world of entrepreneurship. What are the challenges you're seeing as an investor in ventures that are looking to transform the future of work and learning?

Yigal: Right now, there are, candidly, a myriad of challenges. We've seen recently the US economy is in an interesting space, right? I mean, I think it feels like if you're looking at the stock market, we're doing okay. If you're looking at inflation, we're not. If you're looking at job growth, it's mixed. And so it's a bit of a confusing space right now, in a confusing place, the U.S. economy. And how that's impacted the venture space is it's made investors become less risk tolerant. And so they've held capital a bit more on the sideline. And what that does is that impacts entrepreneurs' ability to raise capital and forces them to be a lot more capital efficient. It forces them to take less risks. And so it's had some interesting impact on the venture space more broadly, but particularly for workforce and future of work. And so what we're telling our portfolio companies is definitely, you know, operate as if this last capital raise is your last. Because there's still a lot of uncertainty in the market, and we don't know how much capital is out there. So, they're really focused on getting to profitability as opposed to growth at all costs. And so those are some of the micro challenges that we're facing at the portfolio level. That said, we're still seeing opportunities within certain areas of the economy. So the green economy is an area where we are still seeing growth and a lot of investment flow. When we're thinking about the semiconductor and the CHIPS Act, there's a lot of government investment that trickles down to entrepreneurs, and so we're seeing a lot of opportunity within that space as well. And again, I think manufacturing with some of the onshore and that we've seen over the past few years is also an interesting space to be investing in and building products and tools that are meeting the needs of manufacturing workers.

Julian: Yigal, what are the challenges presented by digital and AI transformation, and especially for low age workers? I mean, I know that's a big part of the population you're looking at.

Yigal: We think of technology as a vehicle to remove barriers, you know, preventing adults from growing their talent and connecting them to meaningful work and economic opportunities. So when we think about AI, we think that there are positives that we're excited about. So we've invested in companies like Anthill that we talked about. Korbit is another AI-driven company that is providing engineers with kind of a one-on-one mentor. So it's like a, you know, a mentor that's working with you side by side next to you. And those types of solutions are interesting and have promise because they can scale at a very cost effective way and provide personalized learning to individuals who otherwise wouldn't be able to access those types of training and learning, right? And so on that side, there's a real promise and impact that personalized learning and training can have leveraging AI. I think on the flip side a lot of people are worried about, of course, how does this impact roles that individuals are in? Will it on a net reduce roles? It will certainly change roles. And as you change roles, like who's providing you know, the training required to reposition workers and allow them to flourish in this new environment? I think that raises, you know, big questions. Is it the government? Is it corporates? Is it, you know, the responsibility of individuals to do it on their own? But when you're talking about low wage workers, I mean, they're juggling a lot of different things. And so I think as a community of folks who really care about workforce development, future of work, particularly for low wage, moderate income earning adults, we have to be really thoughtful about implementing AI and how we are harnessing it for both its good and reducing the risk that it may pose as well.

Kaitlin: It's a big, it's a really complex, big question, right?

Yigal: It's a complex, big question. And I think one of the benefits of JF Adventure is like, I don't have to have all the answers. That's the good news because JFF has just launched a center for AI. And so we, you know, when I have a question around AI or when I have a question around apprenticeship or returning citizens, I kind of turn to my colleagues who are deep experts in their respective areas of work. And I say, hey, we're looking at this company. It is saying that they're, you know, doing things in an equitable AI fashion. Can you help me better understand this opportunity, you know, while we're in diligence? And so I think that's an important lesson for the listeners as well. It's very hard to be a generalist in this space that is so broad and complex. And so if you do decide to build internal investment teams or you do decide to dip your toes with investments, making sure you have the right broader talent or advisory board that can help you support in that investment decision making. Because the very first and foremost thing we try and do as impact investors is do no harm. Which already sets us apart potentially from the rest of the investment.

Kaitlin: This is a question that Julian and I talk about a lot, right? Like what does the future hold with digital transformation, with AI? And it's a, no one really, right? You read articles every day and it's like, no one really knows exactly what all this means and will amount to, but it's really helpful. I mean, it's, it's such a great insight that the connection to JFF allows for you to dig deeper on some of those questions and have, and be able to say, wait a minute, maybe I'm not the expert here, but I know some people who are and can help think through those particular questions.

Yigal: It's not always about having the answer to the question. It's very often knowing who to ask the question to that helps us in our work.

Julian: Well, but in an interesting way, as you describe your investments and portfolio, you're kind of asking a bunch of different questions.

Yigal: We are, and we are asking those questions of, you know, traditional learning spaces, higher ed, traditional higher ed. We're asking those questions of, you know, the shorter term programs. We're asking the questions of should corporates be, you know, training and providing credentials to their workers as they help, you know, ladder them up. So we really are, I mean, part of the Fund's thesis is like, you know, testing for these best high impact solutions. And really, there is no substitute for actually getting out and testing. And so that's part of our work and our impact as well.

Kaitlin: I guess as we think about impact, how long do some of these ventures have to show impact? What's the time horizon look like? Because some of the work is so hard and seeing that impact, I would imagine, can sometimes be challenging early on.

Yigal: Yeah, it's an interesting question. It's complicated, right? I think when you're an early stage founder, you're solving for so many different things. One of the things is obviously demonstrating that the product is working in the intended way and having impact. And so there are short term outputs that we can capture. Right. I think when we think about the longer term impact or outcomes, that becomes a little bit more of a time-bound measurement. So, you know, it takes a bit of time to better understand are people actually staying in their roles? Are they growing? Are they using the skills that you've provided to truly help them earn a livable wage, et cetera? And so we're measuring for things like outputs and outcomes. Outputs are things we can measure faster, outcomes are over time really. But as a founder, you're obviously interested in the impact along that entire journey. I just think there are times where you're solving for so many different things and it becomes a challenge, particularly in this environment where there is a lot of uncertainty. You may be solving for running out of cash in three to six months, in which case, you know, really focusing on the impact in this particular moment is secondary in some ways. You're really just trying to find product market fit. You're trying to sell. You're trying to build the right team. And so as an impact investor, we are investing in products and tools where the impact is embedded into the business model itself. So we're not really, we're not taking a ton of risk on like, will this product have impact? But we are also thoughtful and patient with how these companies scale and how their ability to demonstrate kind of those longer term outcomes if you will, right?

Kaitlin: Well, and the distinction between outputs and outcomes, I think is a very helpful distinction because it's like what are the short-term metrics versus the longer term outcomes or longer term impact that you'd like to see and just recognizing some of those things take a little while. So I really appreciate that distinction. Along those lines, what advice would you give to aspiring entrepreneurs looking to make a mark in workforce development and ed tech based on what you're seeing?

Yigal: I'd say be very passionate about the problem you're trying to solve because it's not an easy road. One of the things that we've seen, you know, my co-managing partner in the fund experience first hand, like sometimes having a co-founder is very important. You know, because it is so challenging to build a business on your own, you do have to juggle so much. We do love to see companies with co-founders so that you're sharing those duties and you can focus in your respective areas. Partnering with the right capital. You know, capital can be a commodity. But looking for your early checks to be with strategic investors or from strategic investors, I think is an important takeaway as well. Building for scale. You know, these are big problems that we're trying to solve. And so you do have to have that kind of mentality out of the get-go. How am I gonna tackle up-skilling and training for tens of millions of people? And working backwards, how am I gonna design a company that allows me to do that? And so those are the types of solutions we're looking at and the ones that we see ultimately become successful.

Julian: It's a tall order. It's really, you're asking a lot and doing incredibly important work. And so as we wind down our interview now, which really has been fantastic, how can people learn more about your work?

Yigal: The best way to learn about our work is to follow us on our newly minted LinkedIn page at JFF Ventures. We're also on the JFF website and so that's pretty easy to navigate. And we do have an email if you do want to reach out it's ventures at JFF.org. That comes to me and the rest of my team and we're always looking to partner with folks that are building in this space, partner with you know founders, and certainly others who are interested in investing. We'd welcome that opportunity.

Julian: Great, well thank you so much Yigal. Really appreciate your time.

Kaitlin: Thank you, this was a fantastic conversation.

Yigal: Thank you both, I really appreciate it and talk soon.

Kaitlin: That's all we have for you today. Thank you for listening to Work Forces. We hope that you take away nuggets that you can use in your own work. Thank you to our producer, Dustin Ramsdell. Work Forces is available on Apple, Amazon, Google, and Spotify. We hope you will subscribe, like, and share the podcast with your colleagues and friends. If you have interest in sponsoring this podcast, please contact us through the podcast notes.