Block invests $3 million in fund for Canadian Indigenous businesses

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Block Inc., the fintech company formerly known as Square, has injected $3 million into a Canadian Indigenous investment fund, marking the first private contribution to the government-backed fund, the National Aboriginal Capital Corporations Association (NACCA) announced Thursday.

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NACCA, which oversees 50 Aboriginal Financial Institutions (AFIs) in the country, manages the $150-million Indigenous Growth Fund that came out of the 2019 federal budget. The fund is doled out to AFIs that finance the ventures of Indigenous entrepreneurs who face systemic barriers when launching a business, said Shannin Metatawabin, chief executive of NACCA.

“The Indigenous market is an untapped source of potential for (private) investment,” said Metatawabin. NACCA was also part of the group of more than 25 Indigenous organizations that recently put out a national economic strategy for Indigenous prosperity.

That report found that if the productivity gap was closed between Indigenous peoples and non-Indigenous Canadians, gross domestic product would increase by $27.7 billion, or 1.5 per cent of GDP, annually.

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The report, which came out last week, issued more than 100 calls to action for Canadian businesses, investors and government bodies to facilitate economic reconciliation. The strategy focuses on four key pillars: people, lands, infrastructure and financing.

Indigenous entrepreneurs need easier access to capital because of the systemic barriers they face, said Nicole McLaren, Métis business-owner of Raven Reads, a monthly subscription box company that sends books and Indigenous-crafted gifts to subscribers.

“Speaking for myself, I don’t come from a position of wealth or any personal net wealth,” McLaren said, adding that she also didn’t have a network of well-off family and friends to tap into. “If I wanted to pursue a traditional term loan through a bank or some other lenders, I did not have that security or collateral to put down to get any substantial amounts.”

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That’s why AFIs and the Indigenous Growth Fund is important, she said. McLaren began her business in 2017 and thanks to AFIs, she was able to secure about $20,000 to help jump-start the branding and online aspects of her business. Last year, she broke $1 million in revenue and is on track to exceed that this year, she said.

“Inherently, investing in an Indigenous business is going to have a substantial ripple effect because of the way Indigenous entrepreneurs think, in terms of giving back to their community,” McLaren said. “By investing in Indigenous entrepreneurs and Indigenous ventures, you are having a much broader impact and you are likely to have much better ROI.”

Courtney Robinson, global head of financial inclusion at Block, said the $3 million is part of her company’s US$100-million social impact investment fund.

“There are all sorts of things that can hamper access to capital that are unique to Indigenous Canadians,” Robinson said. Though the loan will earn Block interest over time, it’s not seeking to turn a profit from its fund.

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