Raven takes an ‘Indigenous culture-centered approach’ to impact investing. What does this entail?
At the heart of Indigenous culture(s), and therefore our investing practice, is relationality and the seven scared teachings of love, respect, wisdom, truth, bravery, honesty and humility. This means we are all in relation with one another and mother earth and must act according to these values. In practice, this translates to a different way of acting and recognizing that we are in relationship with our portfolio companies and our investors, and that our approach becomes inherently more patient and is less of a transaction. It means that in our deal structures we are less extractive of value than traditional VC. Our investors understand we are here to create long-term economic resiliency in the Indigenous economy.
From the first engagement with Indigenous enterprises, we take the time to build a relationship and an understanding of who the founders are as people and within their community. If we can understand and respect their reality, this informs and buoys discussions around growth and exit strategies. We have found this builds stronger businesses in the long run.
How receptive have LPs been to this approach?
Without exception LPs have welcomed this approach, and it is our belief this is one of the reasons why they are at the table with us. Raven’s process has been to engage investors along the way and provide opportunities for learning and growth, and engagement in cultural opportunities for those who want to come on this journey.
The evidence to date is that investors find this rewarding and we have noticed a sizeable uptick in interest from LPs to participate in our second fund in 2022. We believe it provides for a different sort of investment experience, with high impact and good economic returns.
What frameworks do you use to measure impact?
There is a myriad of impact investing measurement frameworks in the ecosystem, and much work to be done on standardization. As an Indigenous financial intermediary, it is critical for us to see a direct line of sight between our investments and the upliftment of Indigenous communities. In this sense, we were challenged by the existing frameworks and thought it was important to create our own culturally informed approach – the Raven Indigenous Impact Measurement Framework.
This approach employs significant traditional story-telling methodologies alongside new culturally sensitive metrics. We also recognize the value of existing systems, so employ systems such as IRIS, IMP and the Common Approach in parallel to this.
Where can venture capital have the greatest impact in Indigenous communities?
Indigenous communities are so undercapitalized that there is significant space for much more capital to be deployed. It must be done appropriately of course, hence the reason for our existence. Most investment into our communities has been focused on resource extraction or what we refer to as ‘Main Street’ businesses and I don’t think that needs VC at all.
We feel the greatest impact can be had in the innovation economy. Our communities are young, creative and tapped into new technology and ways of doing business. For example, tech and tech-enabled, food security and agriculture, clean energy and natural products are all interesting areas. VC can shine in this space regardless of sector and this tends to create massive spin-off benefits in the community.
This article first appeared in affiliate publication Private Equity International