Dealflow | June 27, 2019

Climb Hire rakes in $2 million for tech-training cooperative

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, June 27 – Climb Hire lets learners pay as they earn, like some of the other tech-training startups and coding bootcamps touting their digital era trade school programs. But the San Francisco-based startup goes further: giving its graduates a cut of the organization’s earnings. 

A group of philanthropic backers including, former Google Chairman Eric Schmidt’s charitable initiative Schmidt Futures, and the Charles and Lynn Schusterman Family Foundation have given Climb Hire $2 million in grant funding to see if its model has legs.

Climb Hire offers a hybrid online-in person skills training program, providing learners/members 200 hours of instruction over 16 weeks. The program can be completed at night and on weekends. Students get paid a stipend for completing assignments during the program. And when they’re done, they pay a flat $150-per-month for four years after securing a job paying $45,000 or more.

Graduates then also become part-owners of Climb Hire’s planned for-profit staffing agency, where they will earn a share of recruitment fees from employers. 

The company was started by Nitzan Pelman, who spent 20 years in K-12 and higher education before realizing that education was no longer a guaranteed ticket out of poverty. 

“Most people go to college because they think they’re going to get a better job, then they end up dropping out, leaving with debt and then going into retail jobs,” Pelman tells ImpactAlpha. “There are repercussions to that, and not a ton of accountability [on colleges] for what happens to these students.”

Social capital

Pelman wanted to create a pathway to better paying jobs for low-income, low-skilled earners, particularly those who didn’t complete advanced degrees. Climb Hire’s model focuses on quick but relevant up-skilling, affordability, and most importantly, network building. 

“You’re eight-times more likely to get a job through a referral,” says Pelman. Yet, lower-income workers don’t often have strong professional networks to lean on for opportunities. Climb Hire opted for a cooperative model to incentivize community and network building among its members.

“Social capital is an important avenue for wealth creation. It’s very hard for people to create wealth just based on income alone,” Pelman explains.

Pelman acknowledges that jobs earning $45,000 per year, particularly in high-cost cities like San Francisco, aren’t on the fast-track for wealth creation. But relatively speaking, that benchmark is nearly double what most of Climb Hire’s applicants are earning, she says. (Applicants earn an average of $24,000 per year, mostly in retail.) 

And Climb Hire’s program is designed to enable people to make that income and career jump quickly. Its four-month program focuses on Salesforce software training, which is an in-demand skill that can be taught on a part-time basis in a few months.

Alternative tuition models

Climb Hire’s doesn’t charge anything until students have completed the program and secured a job. Its payment model is effectively an income share agreement (ISA), and it tracks with a growing trend that pegs tuition and fees to student outcomes, namely their ability to score a well-earning job. Such models are designed to hold educators more accountable to learners and are being adopted widely by college-alternatives, like coding schools Holberton and Lambda, and accelerated undergraduate program Make School. Some universities are also changing their tuition repayment models, and startups like Vemo are moving in to help.

Colombian education finance firm Lumni acquires Paytronage to boost U.S. presence

Pelman uses the term income share agreement reluctantly, however, because she says that while ISAs are improving educators’ accountability to students, a number of them far exceed the value of the education they’re providing. Climb Hire’s flat-rate payment plan is set up to cover only the cost of the next student who enrolls.

“We’re trying to create a financially sustainable model that not profit off of low income people,” she says.  

Climb Hire’s first cohort of 40 learners kicks off in July.