Features | April 20, 2022

How Pursuit is upskilling low-income New Yorkers for high-paying coding jobs

Roodgally Senatus
ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, April 20 — Jukay Hsu’s mother worked multiple jobs after emigrating with him from Taiwan to Queens when he was three years old. At 40 years old, she went back to school to become a social worker. 

Hsu went on to graduate from Harvard University, serve in the U.S. Army – and found Pursuit, a social enterprise offering technology training and career development to New Yorkers without college degrees who are stuck in low-wage jobs.

“I saw what going back to school did for my mom,” says Hsu. “Having access to a good job made a huge difference in her life and in mine.”

Trainees in Pursuit’s program spend a year learning how to code and three more as full-time employees at companies such as Twitter, Spotify, Uber and Microsoft. The tech companies partner with Pursuit to coordinate on-the-job support and mentorship to help trainees until they get settled in their careers.

Through an income-share agreement, graduates only repay Pursuit when they start making over $50,000 per year, at which point they pay a percentage of their income, based on a progressive scale that starts at 5%. Pursuit graduates saw their income increase from an average $18,000 per year to $85,000. More than two-thirds are Black or Hispanic and 40% are immigrants; half are women.

“For as long as fellows don’t have a high-paying job, or if at any point their salary falls below a certain level, they pay nothing,” said Hsu. “If they stop working for any reason, their payments pause.”

Income-share agreements can help transfer risk from students to investors, but in some cases have been criticized for their high effective interest rates. Social Finance has raised nearly $50 million for “career impact bonds” that similarly cover student’s upfront training costs, but work through partners, such as General Assembly, Acuitus, Alchemy Code Lab and American Diesel Training Centers. 

With an additional $100 million from Google, Social Finance will help 20,000 low-income workers gain “Google Career Certificates.” Students will repay interest-free loans of about $6,000 at $100 a month only when they get jobs that pay at least $40,000 per year.

The New York-based private equity firm Achieve Partners last year raised $180 million to acquire companies in health care, information technology and other industries facing skills shortages, create two-year apprenticeship programs and move newly trained workers into high-quality jobs. Achieve’s Daniel Pianko says the skilled labor shortage has made many employers ready to bear the cost of training themselves.

Catalytic capital

To train another 1,000 people, Pursuit has raised $10 million in debt capital through its “Pursuit Bond 2.0.” A pilot first bond in 2016 raised $750,000. Investors in the new facility include Blue Earth Capital and the Inherent Foundation.

“It wasn’t the easiest transaction to do because of the nuances. The income-share agreement is new. The organization is technically a nonprofit,” says Amy Wang of Switzerland-based Blue Earth, formerly the philanthropic arm of Partners Group and now owned by Blue Earth Foundation. “There were a whole bunch of non-traditional features, but the impact itself was so granular and transformative that we could not look at it and walk away.”

The $8 million debt facility is Blue Earth’s first U.S. debt investment. Possible loan losses are backed by a $2.3 million first-loss reserve. Tech executive Zac Smith, chair of Pursuit’s operating board, provided $1 million of the catalytic tranche through a donor-advised fund. 

“I love working with the Pursuit fellows,” says Smith, who offered “to buffer the risk of the rest of the investors so it could create a safer place for institutional capital to come in.” 

More catalytic capital came from Vanguard, ETF@JFF Labs and the Alphadyne Foundation. Pursuit was able to get “early supporters that have been with them through thick and thin,” Wang said.

“If there’s poor performance from the underlying income-share agreements, these investors would be willing to take on that loss,” she said. “We as a more commercial investor would come in at the senior tranche, but then support the bulk of the capital.”

Hsu calls the Pursuit bond “a proven solution to create economic opportunity for blue-collar and low-income adults through job training.” 

Graduates of Pursuit extol the impact the program has had on their lives. “Pursuit legit changed my life,” says Rook Soto in a profile on the organization’s website. “I went from being homeless to owning a home.” 

Soto, who grew up on a farm in Puerto Rico, pursued a career in law enforcement until he was diagnosed with multiple sclerosis and deemed unfit for duty. Soto eventually became homeless and lived out of a van he used for deliveries.

Soon after he started the Pursuit program, Soto secured his first job as a software engineer. He now works as an engineer at a Fortune 500 online travel company with a six-figure salary. He and his wife recently bought a house in Norwalk, Connecticut, where they live with their three children. 

Spurred by his youngest son, Soto has started a video game company to build autism-friendly games for children with sensory-processing disorders.

“It’s remarkable to go from not knowing where I’m going to sleep,” he says, “to owning my own home.”