Sabari Raja, Managing Partner of JFFVentures: Using Venture Capital to Boost  Workforce Training

Van Ton-Quinlivan

Hello, I’m Van Ton-Quinlivan, CEO of Futuro Health, welcoming you to WorkforceRx, where I interview leaders and innovators for insights into creating a future-ready workforce.

Many of our past podcast guests have overviewed existing workforce development programs with observations on what local, state, and national governments can do to build a better system. Today, we’re going to shift the search for answers to perhaps a less obvious source of change in the field: venture capital.

One of leading players in the space is JFFVentures, an impact fund that was spun out of the forty year old workforce development nonprofit Jobs For the Future. As we’ll learn today from its managing partner, Sabari Raja, JFFVentures works with early stage companies which are developing tech enabled approaches to creating equitable economic advancement.

Thanks very much for joining us today, Sabari.

Sabari Raja

Thank you. I appreciate you having me.

Van

Well, let’s start by having you give us your take on traditional workforce training models and what do you think we should be building instead?

Sabari

Well, let’s jump right in. When we talk about traditional workforce training, it worked maybe in the last decade, but it’s not working as well right now. First of all, I think there is a mismatch with employer needs. Traditional programs are often focusing on credentials over skills. You know, 70% of corporate leaders report a critical skills gap. For example, a good percentage of jobs require digital skills, but one third of workers do not have foundational digital abilities. So, my point is that we need skills, but we are training people with credentials. That’s the number one thing.

Second is that many training pathways are too slow and too rigid, which doesn’t really work for how people live and work. One thing is they sort of fail to accommodate the realities of adult learners…how they can balance work and life, especially when we’re talking about underserved populations. There is a large frontline workforce that’s really not sitting at a computer all day long. There’s limited access and equity in this process. Everyone’s not close to a brick and mortar location to go in to get the training needed. The schedules are mostly inflexible.

If you think about individuals in low-income jobs, mainly a lot of single moms, caregivers — and caregiving is not just for parents, it’s also there’s caregiving for aging adults within their families — so there’s so many different aspects that really prevent sort of traditional access to training it makes it inaccessible for a large swath of population.

The last thing I’ll say is today we’re navigating sort of a generational crossroads in the workforce, right? On one end we have Gen Z that’s entering the workforce. Their expectations are to have flexibility. They want purpose. They do have digital fluency, but they often lack exposure to traditional career pathways or work-based learning. On the other hand, we’re seeing an aging workforce that wants or needs to remain employed longer, but they’re facing age bias and skill mismatch, particularly now with all of the innovations and the new technology.  We have to take all of these things into account.

The traditional workforce system was really designed to funnel workers into corporate roles. But today, if you look at where people are working, a good percentage are one person companies. I think like 41 million people are one person owners. There are 33 million small businesses. We’re talking about small businesses that are the backbones of communities, like doggy daycares and salons and HVAC companies.

This is a complicated mishmash of demographic shifts, the type of work that people are traditionally in. So the traditional training system has really focused on a very rigid model that doesn’t work for how technology has shifted and how demographics are shifting.

Van

Sabari, what do you propose? What should be building out instead or adding to complement what is in existence?

Sabari

Yeah, complement is the right word, right? I mean, we are at an interesting time today where we are in the middle of a huge technological innovation, which really gives us the right foundation for how we can change these systems or complement the existing systems.

One is creating personalized learning approaches. I’ll give you one example of a company that we’ve invested in. Manifest is the name of the company and they’re looking at using AI as a business intelligence and a business companion for a small to medium business owners. Traditionally, if you look at the SMB owner, they are not really the type of person that these workforce trainings were made for. First, they can’t really shut down their business to go get trained. Today’s systems have to meet the worker where they are and AI can enable that. And it has to be personalized and it has to be micro, right?  So, how do you personalize training, offer micro coaching, on the job upskilling, as opposed to education that stands outside of the job? That’s one of the ideas.

Van
I’m going to pull on some of the threads that you’ve laid out in terms of the training system needing to be personalized, but before we get to that, I’m sure our listeners are wondering, how did you come to be in this space at this moment in time?

Sabari

That’s an interesting question, It really was not pre-planned. My career journey has been somewhat interesting. I grew up on a farm in South India, a first-gen college student, didn’t really have much social capital, but my parents actually put a lot of emphasis on education, which actually opened a lot of doors to many opportunities.

I came here to the US to do my masters In Texas. That led me to my first job at Texas Instruments, so I happened to end up in a Fortune 1000 company and it happened to be in education technology, which actually led me into many classrooms across the country, many rural school districts, underserved school districts.  I was somewhat shocked to see how we’re like oceans apart in America and India and still there were hundreds and thousands of students who actually faced similar barriers. A lot more equity gaps existed here than I had actually anticipated.

My background is in computer science and engineering technology and that’s kind of how I ended up in this role. I just happened to be at this crux of having the right technical background, being in classrooms, seeing all of these opportunity gaps, and connecting my own lived experience. It was a unique sort of a combination of many things coming together. So that led me to actually leaving my job at Texas Instruments to start my company.

I had no idea what it meant to start a company. I was just driven by this passion and purpose to really use technology to bridge the gap between industry and education. Like, kids were learning in the classroom without any understanding of why they were learning what they were learning, how it can actually be applied to the real world. That was really the problem I set out to solve. And then all the stars aligned. I was in many rooms where all these issues were being discussed. How do we bridge the workforce pipeline gap? How do we prepare students for the future of work? How do we bring equity in this process?

Technology wasn’t playing a role in connecting the dots, and I felt like I had this unique perspective where I could connect all of it, connect it to my own lived experience. That led me to leaving my job at Texas Instruments to start my company, Nepris in 2014, which led me down this entrepreneurial journey of being an EdTech founder.

I never met a venture capital investor before, and never knew how to actually put a pitch deck together, but I was so driven by the purpose of what I was building that I ended up going through the process of raising venture capital to continue building and growing. That is how I first actually came into meeting more impact investors in this space. Impact investors were far and few between ten years back, but I was fortunate to meet the handful of them that were all very supportive for me in my journey. I ended up growing the company, which got acquired in 2021.

Along this journey, I met Yigal, who’s my co-managing partner right now in the fund. He had a vision that I did not even have for myself. He asked me many years back that when I have my exit, I should come join him to build a fund and we reconnected after my exit and I joined him in early 2023. To me, it was like, I walked this journey as a founder. I was seeing other founders and I could put myself in their shoes which gave me a very unique perspective…having that operator background and being an investor really sort of leading with empathy, investing with empathy, but at the same time, knowing what it takes to build a scalable company that can be financially successful as well.

So, I felt like I had all the right elements, but Yigal had the vision of actually having me join him in this journey to build a best-in-class fund that really supports founders like me that’s coming to the table with the lived experience, with the passion and purpose, but with the right technical skills to build a viable business.

Van

That’s so helpful for our listeners to understand how you came to this problem space with all your background, purpose, interests and experience.

So Sabari, what’s the role of employers in the work that you’re doing?

Sabari

I know I’ve talked a lot about solopreneurs and gig workers because they’re often sort of overlooked and underserved. But let’s not forget about this. We still have a large percentage of workers, including frontline workers, who are working for these large enterprises. And employers today play a crucial role in understanding how to deal with this changing demographic and how to address sort of these new pathways — whether it’s skills-based hiring, talent acquisition, or more importantly, talent retention. And most important of all is how do you really provide all the wraparound supports, the benefits, and the access they need in order to thrive at work.

So, one of the programs that we’ve launched with the partnership of JFF’s employer mobilization team, is what we call the Corporate Innovation Council. We have over twenty corporate leaders in learning and development, benefits, HR — mainly from Fortune 2000 companies — and they all come together because they want to know what’s happening in the front lines of innovation. They want to be in the room with these early stage founders, understanding what they’re building and how they can be supportive.

This works for everybody, right? I’ve been a founder….to be in room as a first time entrepreneur with all these leaders, giving you feedback as you’re on your quest to product- market fit, or you’re thinking about how should I think about business models. So employers from these large enterprises are very much in the middle of the work that we’re doing. They’re at the forefront giving feedback to founders working hand in hand.

This is part of my point: we are not looking at venture from our perspective as writing a check and moving on and hope that these companies do well, but really we’re building a movement, a community and ecosystem and involving every stakeholder to be part of this process from the get-go.

Van

So, for those that are maybe less familiar with impact investment, can you just give us the primer on what that means and how you’re approaching it through your current platform at JFFVentures?

Sabari

Impact investments….you know, to me, a venture fund is a venture fund. At the end of the day, we’re investing in companies and technologies that can scale, that can grow, that can be financially viable and return capital to investors. But when we say impact investments, at least from a JFFVentures perspective, it means we are driving towards a particular outcome. There is a theory of change that we are very intentional about, right? For example, we put a lot of effort into being very clear about our thesis: what are the kinds of companies we are investing in; why are we investing in these companies; what do we actually hope to accomplish?

Our first lens when we look at every company is it should be very aligned to our thesis. As you mentioned earlier, Van, we are investing in solutions that support economic mobility for middle to low wage populations, right? There’s nearly 110 million people who earn less than $50,000 a year. That’s the population we are very much focused on which is over 45 % of the workforce, right? So sometimes, people think impact investing is concessionary, it’s philanthropic, but in the last decade, it’s evolved quite a bit where you’re leading with purpose, you have a clear theory of change, you’re driving towards outcomes for a particular population, but at the same time, that doesn’t mean we’re giving up on the growth and the scalability. We’re investing in scalable companies that can sustain, grow, thrive, and return capital for all stakeholders.

Van

So, let me invite you one more time to repeat your thesis and then give us an example of an investment that you made to make it real for our listeners.

Sabari

Absolutely. So our first lens when we look at any company is looking at whether it is moving the needle for the populations we care about, which is people making less than $50,000 a year. This is workers in low and middle income jobs. That is our core focus. Are we really moving the needle as far as economic mobility for this low to middle wage population? And that can be in four different focus areas.

One is what are the skills they need? Once you have the skills, how do we give you access to quality jobs? So education technology, access to quality jobs, is workforce tech. Once you’re in a job, how can employers support your upward mobility? That’s HR tech, what tools does employers need?

And then for this population that we’re talking about, a lot of barriers to work actually is not necessarily at work, it’s outside of work. Access to childcare, access to transportation, access to credit. So that’s the wraparound supports, right? So that’s sort of the fourth focus area. What do they need outside of work to thrive at work?

So we’re one of the only early stage funds that take a holistic view of the entire journey of the worker and invest along that journey education, jobs, career, mobility, and wrap around supports.

Van

Do you have an example of one in each category that would help us get a feel?

Sabari

Yeah, absolutely. I’ll give you a few examples because we just started investing out of our new fund, which is JFFVentures Economic Mobility Fund 1. Pace AI was our first investment out of this new fund. Pace is the first of its kind AI agent that is focused on the English as a Second Langue (ESL) learner. If you look at upskilling and re-skilling workers and bridging these opportunity gaps, the ESL learners — that’s the immigrant population — the biggest barrier to economic advancement is language. The founder, Victoria, is the type of founder we support, founders with the lived experience. She left her PhD program at MIT to start this company mainly because her father came to this country, and although he had the right skill sets, he didn’t have the language in order to land a proper job. He started his career as a dishwasher in the US. So she’s very purpose driven and has the right technical background.

PACE is a first of its kind end-to-end AI agent that serves the ESL learner to fast track English language acquisition, primarily for technical training and essential skills. It’s not a learn English from zero-to-one program, but it’s how do you actually comprehend technical content and increase your reading level so you’re able to qualify for courses and complete your courses with confidence.

This is a deep tech, AI native platform that’s sitting on top of existing curriculum and content. She’s working with community colleges, working with GED, working with curriculum providers, and really unlocking a level of language access that did not exist before. So, it’s a perfect example of a company with founders that have lived experience and building on native AI tools to support a population that has often been overlooked and underserved, leading to real economic mobility and outcomes as far as education and access to jobs.

Van

Do you have any additional success stories to share?

Sabari

Sure. We talked a bit about “solopreneurs” as we look at Gen Z. There’s a lot more people that want to have autonomy. They want to be their own boss because also the cost of entry into creating your own work is much lower. The barrier to entry is much lower. But what’s preventing people from actually going forward with that is  a lack of access to benefits. A W-2 worker has a lot more access to benefits, but 41 million Americans identify as one person company owners and a vast majority of them have to rely on a family member for benefits.

So, Besolo is the second company we invested in. Besolo is an all-in-one solution for the self-employed solo professional, providing them end-to-end access to benefits, to help them maximize tax savings and to reduce the administrative burden with fully integrated financial and operational tools. Besolo is a good example the kind of companies that we’re looking at. Pace is a great example. I already talked about Manifest that’s focused on small-medium businesses.

Another one that was a recent investment is called Kollegio. So, Kollegio is an all-in-one AI-powered college counseling platform that’s connecting students with personalized guidance while also providing colleges with predictive student matches so that they can get the right students in the funnel. The first time I looked at Kollegio, I thought, not another college counseling tool, right? Because honestly, in the last decade, there’s been so many tools focused on bridging this gap in college counseling. But I’m a mom of two teenagers who went through this college admissions process. I just had my younger one graduate high school …

Van

Congratulations.

Sabari

…thank you. I’m ready to be an empty nester. But even as I was navigating this process, I realized the only way to get personalized high-quality counseling is to pay thousands of dollars, which is not even accessible for the middle class sometimes.

What AI has afforded us right now is if you are using it the right way and building the right tools like Kollegio, it’s really opening up an opportunity for every student — no matter who you are, where you’re from, what your background is, what your family income is — to be able to get high quality personalized guidance without leaving your home. I mean, that is democratizing access to quality college counseling and to everyone’s surprise, it hasn’t been done at all very well until today. Kollegio has an opportunity to do that.

So these are the type of companies we’re investing in thinking about these focus areas: access to education, access to opportunities, access to jobs, what support do they need outside of work, and access to credit for non-traditional pathways.

Van

That’s very helpful for our understanding. Sabari, where does your capital come from?

Sabari

Great question, Van. We are in the middle of fundraising. We do run a pilot fund still under the nonprofit Jobs For the Future that had different sources of funding from various philanthropic investors. That was a catalytic fund, but this JFFVentures Economic Mobility Fund 1, is our first institutional fund. We are raising capital from a lot of mission-aligned institutional investors. Many are foundations that have a focus and a purpose to bridge this sort of opportunity gap. They are focused on quality jobs.

Luckily, because of how thesis driven we are, we do attract a lot of strategic institutional capital. Some of them are family offices who care about this work. For example, we have  World Education Services as an investor. They care about this work because they’re focused on the immigrant population, bridging the gap for immigrant communities. We have the SCAN Foundation that is focused on the aging population. How are we really thinking about this? I think 80 million people are going to be over 65 plus by 2040 in the workforce. What are we doing to help support this population? So one of our investors like SCAN is focused on that population.

Then we have other funds, foundations, institutional investors, corporate institutional investors. Obviously, they care about the workforce, the talent pipeline, the skills-based approach to hiring. So there are a lot of different strategic entities, both from the corporate side, foundations, family offices, that have a specific focus on economic mobility for underrepresented communities, and those are our investors.

Van

So, more broadly speaking, is there a growing trend where foundations who have tended to deploy grants — which is kind of money one way out — are many of them shifting dollars or is there more interest in impact investing, which also brings money back in to replenish their supply of capital? What’s your observation of the space?

Sabari

Yeah, there definitely is. Yigal, my co-managing partner…he’s sort of been in the room from day one as impact investing was being defined.  I definitely think impact investing as a category has stabilized in the last decade and a lot more foundations are looking at deploying capital into for-profit funds that have an impact focus. This wasn’t the case even maybe five, six years back. We’re seeing a lot more foundations being able to do this.

Actually, one of the reasons we’re able to attract this capital is also many of them are wanting to learn from us in this process, because we’re not just a fund that’s a standalone fund trying to do this on our own. We are building this on a deep ecosystem like Jobs For the Future. So this is a community, it’s an ecosystem, it’s bringing all the right strategically aligned investors, it’s bringing all the right founders and everybody wants to learn from each other.

We have a number of foundations that are actually first time fund investors in the fund. That’s a really good sign that it’s evolving, but still, we could use a lot more investors and more foundations getting going in this direction. But we’re starting to also see a lot more traction and be the place that many of these foundations are coming to, to be a safe first time investment and to learn from the community as well.

Van

Well, we’ve learned so much about impact investing as a lever for getting the types of solutions we all want and how to deploy capital in a different way, not just in the form of grants or contracts. I wanted to open the floor so you can make any additional points that you wanted to make to our audience, and then invite you to close by telling us what makes you excited about the future of work?

Sabari

Wow, I think one thing is, you know, we’re solving real systemic problems like education gaps, financial inclusion, workforce inequity. These actually create massive, often untapped markets, right? Early stage impact ventures can really outperform because we’re addressing urgent, sticky demand with the loyal user base. So, we have an opportunity to really sort of level the playing field at a time when technology is completely reshaping the future of work. I feel privileged to be in this spot where we’re seeing amazing innovations, amazing founders who have the lived experience, but need the right kind of investor to support them, to take this from idea to growth.

And what is most exciting to me, because I’ve walked this founder journey before, is that just deploying capital is not enough, especially if you’re an early stage investor in this space. Being able to do this on top of a forty-year-old ecosystem like Jobs For the Future that has deep connections in education, workforce, policy, research…this is a community that we are building and that’s what I’m most excited about. It’s not just about being able to find the right companies and invest in them, but to be able to support them with the right kind of support at the right time to help them scale and to reach many more of the workers that are often left behind.

Van

Well, I’m certainly wishing you, all of your entrepreneurs and your solopreneurs, all the best as you’re working hard to provide solutions that help us with and aid us in economic mobility. With that, thank you very much, Sabari, for joining us today.

Sabari

I appreciate the opportunity to share my thoughts, Van. Thank you.

Van

I’m Van Ton-Quinlivan with Futuro Health. Thanks for checking out this episode of WorkforceRx. I hope you will join us again as we continue to explore how to create a future-focused workforce in America.