A social impact fund dedicated to Indigenous entrepreneurs has raised $150 million in its first close.
The fund, called the Indigenous Growth Fund (IGF) will provide business loans to Indigenous entrepreneurs throughout Canada through Aboriginal Financial Institutions (AFIs), which are autonomous, Indigenous-controlled, community-based financial organizations.
“The demand of our entrepreneurs for more capital has mounted steadily; now AFIs will be in a position to meet it,”
The IGF’s lead investors are the federal government and the Business Development Bank of Canada (BDC). The fund has also received investments from Export Development Canada and Farm Credit Canada. The IGF will be led by the National Aboriginal Capital Corporations Association (NACCA). NACCA first revealed this fund in June 2019.
“AFIs know Indigenous entrepreneurs better than anyone; they are close to the Indigenous communities and understand their needs,” said Michael Denham, president and CEO of BDC. “Alongside NACCA, we are providing through these AFIs financing for a growing number of Indigenous entrepreneurs, reaching into the remote and urban communities where financing is needed.”
This first close comes at a critical time for many Indigenous entrepreneurs, as reports over the last year have revealed the pandemic’s disproportionate impact on not only Indigenous-owned businesses but also Indigenous workers.
Nearly half (47 percent) of Indigenous businesses surveyed in July had applied for government assistance during the COVID-19 pandemic. Nearly a quarter of total respondents required $50,000 or more to maintain normal business operations at that time.
The pandemic has also exacerbated existing inequities for Indigenous workers and entrepreneurs. According to a 2018 report, only 1.2 percent of tech workers identify as Indigenous. These workers also earned less than their non-Indigenous counterparts. A more recent report found that, out of 270 tech companies surveyed, the number of board positions held by Indigenous peoples was only seven.
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Both public and private agencies have sought to ensure Indigenous businesses have access to adequate capital during the crisis. In April 2020, the federal government committed $306 million in COVID-19 support for Indigenous businesses and has made additional commitments since that time.
“The demand of our entrepreneurs for more capital has mounted steadily; now AFIs will be in a position to meet it,” said Jean Vincent, chair of the board of directors for NACCA.
The IGF has an evergreen fund model and is not targeted at a specific sector of businesses or region. Indigenous entrepreneurs across all industries, including emergent exporters and food and agriculture-related businesses, will be able to access the fund.
In a statement, the NACCA said the fund’s evergreen model will offer institutional and social impact investors a vehicle for investment that will “directly contribute to economic reconciliation.”
The IGF will be operational and capital will begin to be deployed to AFIs later this year.
Image source National Aboriginal Capital Corporations Association via Twitter