Aboriginal entrepreneurs get a boost from new fund

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There are a number of organizations and programs in Saskatchewan designed to provide advice and financial assistance to Aboriginal businesses. For the past two decades, the Saskatchewan Indian Equity Foundation Inc. has been helping First Nation entrepreneurs by providing funding and ensuring they have the skills they need to successfully start and run a business. And since 1997, the Clarence Campeau Development Fund has been doing the same for Metis businesses.

Supports, financial and otherwise, are also available through a number of other agencies and programs, including Aboriginal Business Canada, the Business Development Bank of Canada, Western Economic Diversification's Community Futures Development Corporations, the SaskNative Economic Development Corporation, the Aboriginal Youth Business Initiative, the Northern Development Fund and the Northern Enterprise Fund, not to mention the Saskatchewan First Nations and Metis Economic Development Program announced by the provincial government last fall.

Now there's a new kid on the block' the First Nations and Metis Fund. An initiative of Saskatchewan?s Crown Investments Corporation (CIC), the fund, announced on May 11, will provide Aboriginal entrepreneurs with an opportunity to access investment dollars to help them start or grow their business. Over the next four years the fund is expected to invest up to $20 million in Saskatchewan businesses that are majority-owned or controlled by First Nations or Metis people.

The First Nations and Metis Fund differs from many other forms of financial assistance already available in a number of ways. Firstly, the fund isn?t a grant program, it?s an investment program offering financing through loans or in exchange for a small ownership position in the company. That means that before the managers of the fund hand any money over to a company they have to be convinced the fund will see a return on its investment.

"In a grant program, when you take a look at an investment opportunity, you're really looking at how many jobs will it create and what sort of economic benefit and does it sound like a good opportunity. When you're making an investment that you're looking for some return from, there's a little bit more due diligence that has to go into it," said Wanda Hunchak of Westcap Mgmt. Ltd., a professional fund manager based in Saskatoon that has been brought on board to help CIC administer the First Nations and Metis Fund.

Secondly, the fund is set up to provide financing for larger scale business initiatives?those that require investments of between $1 million and $3 million.

"And the reasoning behind that is we didn't want to compete with existing funding sources out there. There are a lot of funding sources that do the under $1 millon sort of deals, but the larger deals, there wasn't really a specific fund for them," Hunchak said.

The focus of the First Nations and Metis Fund will be investing in businesses involved in industry sectors the province has targeted for economic growth; value-added agriculture, advanced technology, energy, mining, forestry and forestry developments and manufacturing; as well as in the area of Aboriginal-themed tourism.

In addition to providing financing to businesses, the fund managers will be working to line up other investors.

"So the idea is we would come in with one to three million, maybe Clarence Campeau would come in with $500,000 and the proponent or owner of the company would come up with maybe $100,000 to $200,000 or whatever equity they can bring to the deal. And maybe we'll bring in some other funding sources, some private investment from even the non-Aboriginal community," Hunchak said. "So that's sort of the idea behind having us as fund managers, is to be able to bridge that gap between traditional Aboriginal and the more non-Aboriginal investment community."

Once word got out that the First Nations and Metis Fund had been created, it didn?t take long fo te inquiries from entrepreneurs to start coming in, Hunchak said. In the first three weeks of the fund's existence, more than 30 businesspeople contacted the fund managers to see if they would qualify for assistance. While some of the businesses have been a good fit for the program, a majority of them haven't, so the fund managers have advised them on other routes to take to access the support they need.

"So what we've been doing is just referring them to one of our funding partners like Clarence Campeau Development Fund for Metis and Saskatchewan Indian Equity Foundation for First Nations," Hunchak said. "And that's part of the idea behind the fund as well, was to have one other avenue that people could go to ... and just be able to have that referral process."

While it's advisable for entrepreneurs to have a business plan in place before they contact the fund, fund managers can help find funding to develop business plans or conduct feasibility studies, Hunchak said.

For more information about the First Nations and Metis Fund, call Grant Kook or Wanda Hunchak at 665-0200 or e-mail them at fnmf@sasktel.net.