Investment Notes Forte

Investment Notes: Forte

Date Published:
May 24, 2021

Blackbird is excited to be part of the seed investment round into Forte Global, an education finance system transiting the unemployed into modern world jobs.

Blackbird is excited to be part of the seed investment round into Forte Global, an education finance system designed to transition the unemployed into modern world jobs.

Forte was founded by Nat Ware to bring life to a powerful idea he developed while completing his PhD at Oxford University: that there is a way to finance education at no cost to either individuals or governments, and without relying on philanthropy. Rather than the unemployed paying for their training and bearing the risk, investors could fund it, with governments passing back a portion of the actual economic benefit (the increase in income taxes) that results from that training and subsequent new job creation.

Education Finance

“Show me the incentive and I will show you the outcome” - Charlie Munger

The FORTE model (which stands for Financing Of Return To Employment) has four key stakeholders:

  • Training recipients/job seekers want to develop skills to qualify for new, better work. They may not be able to pay for the programs on their own or are wary of available financing options (such as loans and income-share agreements). Crucially, they are not well placed to evaluate which programs lead to excellent employment opportunities, with public outcome data lacking and student alumni happiness unavailable.

  • Training providers want to increase their revenues and expand their programs at scale and not spend millions on Google and Facebook to acquire each student one at a time. They also want the top students, and know they’ll get high-quality applicants if the training they offer is at no cost to recipients.

  • Governments want to save on welfare costs (i.e. unemployment and retraining), boost the economy (and collect more taxes while they're at it), close skills gaps, and have happier citizens.

  • Private sector investors want good investment returns and positive social impact, with perfect alignment rather than a tradeoff between the two.

Now usually, at Blackbird, we love companies that sell in a bottom-up frictionless way to the workers in an organisation - the polar opposite of selling to Governments and getting them to agree to redirect future tax revenue of the unemployed to investors. But we are more than happy to make exceptions for the exceptional; in this case for Nat doing his life’s work on a transformational idea that has a chance to affect systematic change. Additionally, Governments already fund social security and spend huge amounts of their annual budgets on programs designed to achieve similar outcomes.

The pitch by Forte to governments is akin to Google’s pitch to marketers back at the turn of the century: why pay for advertising that might not work when you can pay only for the consumers who click on your ads? Forte is offering governments the option of paying only when the unemployed are back at work and have paid tax to them. We think that is a compelling pitch.

Forte’s value to all other stakeholders is more straightforward: the unemployed would love to access quality education that will lead to a better job “for free”, educational institutions would love a partner who directs thousands of students their way and funds them to scale up and impact investors are fascinated by a product that potentially gives them lucrative returns and helps the unemployed transition into better careers.

Bursting The Bubble

What excites us at Blackbird is the chance to tame a societal force that is becoming one of today’s great challenges: the bubble in higher education.

The cost of education has spiralled out of control, and only through the creation of an entity with strong negotiating leverage can we hope to bring costs under control and direct students to the programs that deliver great value for money and excellent employment outcomes.

Founder Nat Ware is well placed to start a movement. He founded 180 Degrees Consulting when he was 19 years old, building it into the world’s largest consultancy for non-profits and social enterprises. Today, the consultancy spans 172 branches across 42 countries and has provided over 5 million hours of consulting services.

Over time, if Forte manages more and more capital, they have the ability to direct students only to the programs that are high quality and as they get bigger, will have the ability to negotiate lower pricing with those institutions, given they are able to remove the huge marketing expenses each spends to attract individual students. The cost of education is an ambitious, complex problem to solve, and we believe it will take a wild idea to solve it. Forte’s journey is just beginning - and we look forward to supporting Nat and his team on the journey forward.