SAN FRANCISCO, Oct 25 (Thomson Reuters Foundation) - North American investors seeking to do good as well as make financial returns could be overlooking an untapped opportunity on their own doorstep - indigenous entrepreneurs.
From renewable energy to traditional handicrafts, investing in indigenous ventures is bound to create social impact because their communities have so little, said Michelle Fox, managing director of NDN Partners, which supports indigenous ventures.
“Tribal community projects are often underfunded. Basic infrastructure is lacking. I’m talking housing, water, street lights, energy,” Fox told the Thomson Reuters Foundation this week at the sidelines of the annual SOCAP conference in San Francisco.
“And 19% of the Navajo nation does not have electricity,” said Fox, a former tribal CEO who splits her time between Phoenix and Montana, where she is an enrolled member of the Fort Belknap Indian Community.
Interest in impact investing, which marries social or environmental outcomes with financial returns, is growing fast, estimated to be worth $500 billion.
More than half of this sum, 58%, comes from Canada and the United States, according the Global Impact Investing Network (GIIN).
There is no data on how much is invested in indigenous businesses.
Yet indigenous-owned businesses in Canada - of which there are about 43,000 - are yet to feel the benefits, according to research from the University of British Columbia and Purpose Capital.
The research cited a survey in which 36% of these businesses said access to equity capital was the biggest obstacle to growth.
One of the first ports of call for businesses seeking investment is usually friends and family, so it can be hard for deprived indigenous communities to start and grow ventures, said Jeff Cyr, managing partner of Raven Indigenous Capital Partners.
“The impact of colonization on indigenous people in Canada, and around the world, essentially meant that you had this stripping of wealth and inability to create intergenerational wealth,” he said.
To meet this gap, Vancouver-based Raven launched the first indigenous equity fund in Canada this year to support social enterprises.
They include Ontario-based Cheekbone Beauty Cosmetics, an indigenous education firm and Animikii, a Turtle Island-based digital agency that offers technology training.
Cyr said most indigenous enterprises focus on giving back to their communities, providing jobs or services and making them ripe for impact investors.
Yet racial bias and stereotypes might make investors wary of making investments because they can perceive them to be risky, SOCAP experts said.
Lawrence Lewis said he encountered negative stereotypes that indigenous people were unwilling to work or not trustworthy when he sought investment for his social enterprise One Feather.
His company uses technology to help Canada’s First Nations peoples with governance issues such as mobile voting.
“There was a lot stigma and stereotyping around what it means to do business with indigenous people – some of it very insulting and inappropriate,” Lewis said.
Such distrust can work both ways, Cyr noted.
“If you’re not a known commodity in the Navajo community and don’t do a proper protocol ceremony and get to know people, they are not going to play with you because of the history of colonialism,” he said.