Visions of Aboriginal entrepreneurship financing in Canada’s CAPE Fund

Walking the fine line between self-determination and colonization

Laura Pinto & Levon Blue | #AIE2015RyersonU

Refer to draft paper for details and references @DrLauraPinto

CONTEXT & THEORYIndigenous entrepreneurship

CANADIAN ABORIGINAL CONTEXTWalking a Fine Line:

• 4.3% of Canadian population, and largest growing segment• Fundamental social and economic inequity• Outcomes reflect sustained systemic inequity

• Lower median after-tax income (CCPA reports in 2006, median income for Aboriginal peoples was $18,962 – 30% lower than the rest of Canada);

• More likely to experience unemployment;• More likely to collect social assistance;• Homes more often in need of major repairs;• More likely to experience physical, emotional or sexual abuse;• More frequent victims of violent crimes;• More likely to be incarcerated and less likely to be granted parole.

• Source: http://www.cbc.ca/strombo/news/new-report-details-inequalities-between-aboriginal-and-non-aboriginal-canad

ABORIGINAL ENTREPRENEURSHIP

Literature Review Highlights:

• Driven by unsuccessful “passive welfare” systems• Entrepreneurship thought to lead to autonomous

participation in mainstream economic systems (Hindle & Moroz, 2010)

• Western-style entrepreneurship has reproduced inequality among Aboriginal peoples (Revely & Down, 2009)

• Entrepreneurs struggled to fit into a white business world, alienation from Indigenous peers (Revely & Down, 2009)

• In Canada, communal land ownership and Council Resolution requirements have been barriers to business development financing

THE PROMISE OF ENTREPRENEURSHIP?Walking a Fine Line

• Entrepreneurship tends NOT to remedy unemployment (Pinto, 2014)

• High new business failure rate in Canada• Lower wages and longer working hours than

employed counterparts in Canada• Research in 23 OECD countries over 28 years

identified a “refugee effect:” entrepreneurial activity during periods of high unemployment does not lead to lower unemployment

• Questionable developmental appropriateness, especially for elementary school students

SITUATING OURSELVES IN POST-COLONIAL SCHOLARSHIP• Post-colonialism is an ideal yet to be realized (Battiste, 2013)

• Aim of disrupting Eurocentric ideologies entrenched in systems and practices

• Spectrum of conceptions, with these common features: • Takes a position against Western imperialism • Questions underlying assumptions • Social justice for those oppressed by Eurocentric

practice is the goal

Walking a Fine Line

BRAYBOY’S (2005) TRIBALCRIT• Grounded in critical race theory (CRT) with 9 tenants:

1. Recognizes colonialism is endemic to society2. Policy is rooted in imperialism3. Aboriginal and Indigenous peoples have liminal power in

current systems and structures4. Aboriginal peoples desire tribal sovereignty, autonomy, self-

determination, and self-identification 5. AE and IK case new meaning on knowledge, power and culture6. Structures and policies are intimately linked around the

problematic goal of assimilation7. Philosophies, beliefs, customs, traditions, and visions for the

future are central to understanding the lived realities8. Stories are not separate from theory9. Theory and practice are connected to and for social change

Walking a Fine Line

Conventional Market-Based Entrepreneurship

• Grounded in classic economic theory

• Outcomes: profits/ maximizing shareholder/ investor return

• Works within existing and established systems and norms – entrepreneurs must conform to systems and processes

• Meritocratic stance

Social Enterprise

• Grounded in social constructivism

• Outcomes: applies commercial strategies to maximize social outcomes rather than profits

• Works within existing and established systems and norms

TribalCrit Entrepreneurship

• Grounded in post-colonial scholarship and critical race theory (CRT)

• Outcomes: multiple bottom line with tribal sovereignty and self-determination as principal goals

• Attempts to transform structures and norms to reflect AE and IK while avoiding assimilation

Models of EntrepreneurshipWalking a Fine Line

Origin: established in 2009 by former Canadian Prime Minister Paul MartinMandate: “to further a culture of economic independence, ownership, entrepreneurship, and enterprise management among Aboriginal peoples, on or off reserve through the creation and growth of successful businesses”Objective: “to help individuals and groups overcome barriers typically faced by Aboriginal entrepreneurs”Activity: $50 million from 21 Canadian private-sector sources and various US foundations distributed among 7 to 10 companies over the fund’s lifeCriteria: projects linked to Aboriginal groups through ownership, employment or geographic proximity

Enter CAPE Fund…Walking a Fine Line

METHODS

CRT STORY-BASED RESEARCH

• Organizational story (rather than individual narrative) since the object of study is at the organizational level

• Purposive selection of 2 of 7 CAPE Fund ventures for contrast:• forms of ownership (Aboriginal partnership versus

majority Aboriginal ownership)• varied industry (land agriculture, versus fishery)• varied investment type (common equity versus

debenture)• diverse outcomes

• Interpretive analysis using TribalCrit

Walking a Fine Line

FINDINGS: 2 STORIES

Ownership: Privately-owned OEF, a subsidiary of Sprott Resource Corp. (TSX: SCP) that leased First Nations land for farming in exchange for equity participation and economic benefits job training and employmentIndustry: AgricultureInvestment: $3 million common equity Outcome: By 2014, OEF sold its machinery and terminated arrangements on hundreds of thousands of acres of cropland affecting “hundreds of leases” with First Nations communities and individuals

Story 1: One Earth Farms (OEF) (2009/2010)Walking a Fine Line

Ownership: Majority owner Metlakatla Nation operates Coastal Shellfish within an alliance among members of the Coastal First NationsIndustry: Shellfish aquacultureInvestment: 2011: $1 million as a participating debenture additional $4 million in 2013 for expansion. The debenture would be ultimately paid back to the investors but Coastal First Nations would benefit from growthOutcome: Aboriginal ownership maintained and operations expanded on Coastal First Nations’ terms

Story 2: Coastal Shellfish (2011, 2013)Walking a Fine Line

DISCUSSION & ANALYSIS

• Narrow, prescriptive eligibility criteria• Most Aboriginal businesses are small and would not qualify• Risk that shareholders’ interests are ahead of the Aboriginal

communities involved in making long-term decisions about operations

• Despite stated “social” mission, a single, financial bottom line is privileged above others: investors expect financial benefit “after taking into the cost associated with the social return”

• As a social criterion, “skills transfer” suggests possibility of assimilationist mission, and a deficit stance against community-based knowledge

Walking a Fine Line

CONCLUSIONS• A postcolonial, TribalCrit conception of entrepreneurship

needs “to be freed from its cultural captivity” in order to address the realities and needs of Aboriginal communities, and hold economic and non-economic objectives in tension

• Must avoid “illusion of inclusion” through transformative structures and actions

• Traditional venture capital funding attempted to erase inequity in ways that led to neocolonial subjugation in Story 1, but offered promise when enacted differently in Story 2

• Careful attention to criteria and practices that honour AE and IK are essential for sustainable Indigenous and Aboriginal entrepreneurship, especially multiple bottom line accounting

• Stories need to be shared not only among Aboriginal entrepreneurs, but in the broader community so we can learn from others’ triumphs and troubles

Questions?