Intertribal Capital Investment to be StudiedMay 15th, 1993 | By tcj | Category: 5-1: Art, Tribal College News
The Northwest Area Foundation of St. Paul, Minnesota, has awarded a grant to United Tribes Technical College to study the possibility of establishing a tribally controlled venture capital company to provide investment capital to Great Plains Indian tribes and reservations seeking economic development.
It will identify participating tribes and inventory reservation investment opportunities in North Dakota, South Dakota, Montana and Minnesota.
Based on this inventory it will identify a service area for the proposed company. The grant is for $138,000.
Once this initial work is completed the investment company will be incorporated and a prospectus developed. The purpose of the prospectus is to create a pool of investment capital through selling shares in the new company.
Initial capitalization of the company will be at $15 to $20 million dollars. It expects to attract investors from tribal, foundation, private and federal sources. The company itself will be an independent for-profit enterprise with its profitability being tied to its capital investments in promising economic enterprises on the reservations within its service area.
The need for a stable source of venture capital has long been a glaringly obvious on the nation’s Indian reservations, according to college officials. On the one hand tribes have often been forced to relinquish ownership and control of profitable reservation investment opportunities to outside non-Indian enterprises because they lacked funds of their own.
On the other, when tribes have been able to raise business development funds through federal loans and other sources, the BIA’s Indian Finance Act, the new enterprises invariably start with a built-in handicap; almost all of the cost is borrowed money which is often too great a burden for the new or expanding Indian enterprise.
The proposed new venture capital enterprise offers a way of avoiding this dilemma. Rather than the tribes being forced to borrow both their investment and operating capital, the new company will purchase minority equity interests, from 25 percent to 33 percent in selecting tribal business development opportunities.