First Nations equity a boon

Filling major gap for entrepreneurs

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Kristel Schunemann got her truck driver's licence when she was 23.

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Opinion

Hey there, time traveller!
This article was published 20/01/2011 (4401 days ago), so information in it may no longer be current.

Kristel Schunemann got her truck driver’s licence when she was 23.

She’s always loved the heavy equipment. She drove long haul and operated all sorts of equipment while she was an employee on the ground side at the Winnipeg International Airport.

Now she owns her own construction company, called Gazee Construction, with two graders, a loader and service truck thanks to a loan from the First Peoples Economic Growth Fund.

PHIL.HOSSACK@FREEPRESS.MB.CA Kristel Schunemann says the loan she received was critical in getting her construction firm off the ground.

“It’s great to be you own boss,” said the 35-year-old member of Peguis First Nation. “This was a chance of a lifetime.”

Schunemann’s business is one of 33 that have been funded by the two-year-old First Peoples Economic Growth Fund (FPEGF), formed in 2008 with about $20 million from the provincial lotteries kitty.

This week a new Métis investment fund was established with $3 million from the federal government and another $1 million from the province. The Métis Resource Economic Development Fund (MREDF) is designed to provide equity financing for Métis-owned businesses working in the energy and resource sector.

The funds fill a glaring need in the aboriginal community for a leg up in economic development. What’s astonishing is that they are so new.

But because of the risky nature of any kind of business startup or expansion, some time needed to be taken in the planning of each of them and much care needs to be taken in the management of the funds.

Blake Russell, CEO of the Métis Economic Development Organization who will administer the Métis fund, said the idea is to maximize participation from Métis entrepreneurs.

“We spent a long time doing a gap analysis to figure out what the Métis market really needed and all it really needs is equity,” Russell said.

The point being, there’s debt financing out there but no mainstream lender will be too interested in a deal — regardless of who the entrepreneur is — unless they have already secured some investment on their own.

The Métis fund will allow equity investments of as much as $500,000 in any one business.

So, for instance, when it comes to the $2.2-billion Bipole III Hydro transmission line construction project, Russell said there are many Métis-owned businesses already operating who could participate on their own merit.

“If we can add the equity behind them we’ll get to a much higher level,” he said.

Considering the substantial on-going investments in the energy and mining sectors — mainstays of the provincial economy — it seems to make sense it would be a focus for aboriginal economic development.

Ian Cramer, the CEO of the First People’s Economic Growth Fund, is not so much caught up in targeting regions or sectors with his fund. That said, its largest single loan is for just under $1 million to an equipment company that works in the mining sector.

“The main principles we pay attention to are viability and their ability to leverage additional funds,” he said.

Since it began in September 2008, FPEGF has put out a little more than $6 million in 33 companies. Every one of them is current on the payments. By Cramer’s calculations those businesses have also accessed an additional $13 million in loans and other equity investments.

Cramer’s five-person operation also provides support services like business-plan preparation.

Schunemann was told about the fund from a friend after she was already working on her business plan.

“They have been unbelievable,” she said. “There’s after-care for business administration or accounting or whatever your weakness is. They can help you.”

The word of mouth on the fund has been picking up over the past three quarters and Cramer now has more than 20 loan applications that are being considered.

“There are a lot of amazing entrepreneurs out there,” he said.

While the fund is to serve as a tool to kick-start more wealth creation among the First Nations community in Manitoba, it also needs to be managed so it too, will be self-sufficient.

Cramer said he’s pleased to see more applications coming in from existing, viable businesses that are looking to expand as well as from applicants who are looking to buy businesses from previous, non-aboriginal owners.

Those are the kinds of building blocks that these funds can provide and they are the obvious results of grass roots economic development that must be part of the future of the province’s aboriginal community.

martin.cash@freepress.mb.ca

Martin Cash

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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