More Americans than ever want to escape the rut of a low-paying job, but quitting to pursue a new profession is a risky proposition. Pursuit has raised $10M in funding for a promising and potentially self-sustaining new model for training up new tech workers in which learners only pay they land a real position.
The job market is a strange one right now: Tons of open positions, but workers are holding out, demanding fair compensation and good working conditions — and many jobs with those in tech won’t give a second look to an applicant without an appropriate degree.
Pursuit founder Jukay Hsu observed that there are job training programs out there, but not only do they often cost considerable money up front but their support ends when the classes do. And philanthropy in this area, while generous in some ways, is simply not commensurate to the size of the problem.
“Getting the skills is a necessary but not sufficient condition for getting hired,” said Hsu. “You can be talented and smart and capable but there are still structural barriers. If you don’t have a degree you won’t even get an interview.” (And the interview isn’t likely to be much fairer, he added.)
On the employer side, managers are desperate to fill positions but unwilling to take the risk on an applicant with no degree or relevant job history. But as Hsu pointed out, the truth is entry level jobs are seldom actually skill-limited — more likely you need someone familiar with the tools and flexible enough to learn on the job.
The missing piece is in risk management on both sides of the market: job seekers don’t want to go into debt for training that might not get them a position, and employers don’t want to gamble on someone who doesn’t meet their (not necessarily relevant) qualifications.
Pursuit is building a model for job training that mitigates both these risks. On the job seeker side, learners with low or no income can get training and support that costs them nothing unless they get a job earning more than $50K, at which point they can figure out payment. That takes the form of 4 years of payments of 5-15% of the income from the new job.
That’s a hefty commission, to be sure, and there’s something fundamentally distasteful about the idea of lifting someone up and then slicing a piece off their success. But the idea is that the person would be earning way more to start with at the new job and would still have more after these payments. And as the money is going back into the fund, it goes towards covering the upfront costs of the next class of learners. Other options like coding bootcamps cost thousands just to walk in the door. For someone barely able to pay rent, the ability to defer payment is hugely enabling.
On the employer side, Pursuit works with companies to create an actually skills-based hiring process for a pre-set number of positions, but also advises and helps design onboarding and retention processes that address common causes of attrition. There are three years of post-hiring support — “a crucial aspect of our work that helps companies employ and retain talented individuals who don’t come from typical backgrounds (i.e. have college or advanced degrees, etc.),” Pursuit’s A.J. Walton noted.
If it sounds like one of those “good in theory, impractical in reality” ideas, you’re not alone. Hsu was frustrated by the need to prove the model works before anyone would fund the model: “It’s a chicken and egg thing.” But he managed to line up $750K to start testing it in 2016, and after observing it long term they are happy to report that it has a success on every front.
“It takes four years to see results. Going from Uber drivers to engineers, that’s a three-year cycle — if it was three months they’d already have these skills,” Hsu said. After four years, however, 86 percent of the cohort had a job, earning on average more than $85K — more than double or triple what they were making before. 90 percent kept their jobs past the first year as well, so it’s not just like a temp placement program.
Not a bad use of $750K, right? But the trick is that $750K wasn’t spent, as you might rightly expect from any job program — they got a 6.6% return on it, paying it pack in full plus earnings in 2020. Now you understand how that $10M came their way.
The round was led by Blue Earth Capital, with participation from the Inherent Foundation, Pursuit Operating Board Chair Zac Smith, [email protected], Alphadyne Foundation, and Ramesh Chandra, as well as donor advised funds Fidelity Charitable and Vanguard Charitable.
“This second financing round is only because we have these results — and now it’s institutional investors in the lead,” Hsu said. “It means we’ll be able to help a thousand people over the next few years, and it makes us financially self-sustaining. If we can prove it here, there are many more investors interested in this.”
That all depends on the ability of the company to scale its offerings. Beyond simply hiring more people and running curricula for more learners, they’ll have to convince more companies to take part. But if the next 1,000 Pursuit fellows follow anything like the trajectory of the last 100, it could be the start of a potentially transformative new path to upward mobility.