Indigenous VCs form new alliance to support Native American founders

Native American Capital and Investment Alliance is a platform where equity investors, investment advisers and alternative lenders can learn about investment opportunities in Native-founded companies.

By David Bogoslaw – Venture Capital Journal
November 13, 2023

As the events in Martin Scorsese’s latest film Killers of the Flower Moon are currently reminding audiences, the undermining of Native American business interests and wealth accumulation extends back more than a century. On Friday, two venture firms whose founders come from indigenous roots announced the launch of the Native American Capital and Investment Alliance (NACIA), a nonprofit that aims to help bridge the gap between Native American founders, their businesses and providers of equity and debt capital.

Unveiled at the Creative Experience conference in Santa Fe (CxSF), NACIA intends “to significantly impact and shrink the divide between Indian Country and the sources of capital and investment that many other founders take for granted,” according to the organization’s launch statement. CxSF is hosted by Creative Startups and the strategic advisory firm General Creativity.

NACIA is the brainchild of brothers Cameron and Dean Newton, co-founders of Relevance Ventures and members of the Patawomeck tribe, centered around Virginia. Relevance closed on $56 million for its fourth fund earlier this year and is getting legal advice in preparation for launching a much larger Fund V. Launched in 2012, the Brentwood, Tennessee VC firm focuses on wellness in a broad sense, including health tech. Its checks to founders range from $250,000 to $2.5 million. Most of the 25 investments from Fund IV are in Series A rounds.

The Newton brothers invited Kelly Holmes and Alice Loy, co-founders of Skoden Ventures, to partner with Relevance and others to create NACIA. Skoden, launched earlier this year, is currently raising its inaugural fund with a target size of $10 million and expects a first close in December. The Santa Fe, New Mexico-based firm is believed to be the first US venture fund to be founded by a Native woman. Holmes, a member of the Mnicoujou tribe, previously founded and built Native Max Magazine and Native Max New Media, while Loy has been backing small businesses since 2014 through her firm Creative Startups.

In addition to Holmes and the Newtons, founding NACIA board members include Valerie Red-Horse Mohl, president and co-founder of Known and the first Native American to start an investment bank on Wall Street, as well as a Cherokee member of National Association of Women Business Owners Hall of Fame; and Cory Littlepage, co-founder and CEO of Tribal Diagnostics, which was named to the OK Powerlist of Native American Leaders in Business, and a member of the Chickasaw Nation.

Despite recent advances in efforts to increase diversity, equity and inclusion in the venture ecosystem, “Native Americans’ progress has remained minimal,” Cameron Newton, managing partner of Relevance Ventures, said in a statement. He sees NACIA as “an important part of the indigenous community’s response to this issue and positive step towards accelerating positive change,” with the goal of highlighting the potential of these communities.

Navigating unfamiliar territory

Most entrepreneurs from under-represented ethnic and gender groups face more challenges than other founders. But the journeys of Native American founders are further impeded by complicated legal structures and cultural considerations arising from life on and off the reservation, Dean Newton, chairman of Relevance Ventures, told Venture Capital Journal.

“Tribes that are federally recognized are independent sovereigns under the law, which govern themselves for the most part,” he said. “They create their own civil and criminal code and enforce their own laws in their own courts. For an outside investor who’s not familiar with that universe, that’s a little scary because you can’t rely on the legal system in Delaware to administer all of your corporate formation stuff.”

These issues can largely be addressed through education and information sharing, which is important for would-be investors in native-owned companies to understand, Newton added. The same holds true for indigenous entrepreneurs to feel comfortable navigating the private investment landscape, which can be difficult for even seasoned legal professionals to steer through, he said.

“For someone who’s grown up on the reservation, who’s used to tribal government being the sovereign authority, and then they walk off the reservation and try to start their own business, they’re not going to see the tribal council,” said Dean Newton. “In fact, they’re not going to see the government unless it’s the Bureau of Indian Affairs. They’re going into private enterprise, and that can be a shock.”

Kelly Holmes, Skoden Ventures

NACIA aims to provide a platform where equity investors, investment advisers and alternative lenders can learn about investment opportunities in Native-founded companies and contribute to a diverse and inclusive investment landscape. The alliance seeks to align stakeholders around impact investment principles and to facilitate collaboration on issues affecting Native founders, investors and lenders.

In light of the challenges that indigenous communities have had in trying to achieve sovereignty and economic self-sufficiency, “To have a native venture capital association in the trajectory of 500 years is a pretty big deal,” said Loy of Skoden Ventures.

Dean Newton notes that many people become VC fund managers by virtue of having founded a successful company or through their experience in the financial industry, but “those aren’t trajectories that Native people historically have gone down. Whatever the origin of it, the way to address it is to get more native founders in VC pipelines, more Native people on boards.”

For Skoden’s Holmes, NACIA‘s mission extends beyond just providing capital to Native founders. “It’s about nurturing a system that understands and respects the unique cultural and business dynamics of Indian Country,” she said in NACIA’s launch statement. “We are empowering our people to be architects of their own economic destiny.”

Loy credits Holmes – who built a successful business with no outside capital – with making her aware of how difficult it is for indigenous people to “hold true to your culture and your path as a Native person and being a ‘businessperson,’” given the dearth of information available about role models.

“It’s hard to reconcile the dysfunction and the greed and, in some ways, the mismanagement of natural resources and human resources with the values of a Native person and community,” said Loy. “NACIA is staying true to intrinsic tribal values and helping entrepreneurs navigate toward extraordinary business growth without compromising on harmony, integrity, community and spirituality. And that’s not easy.”