By Jacob Maranda – New Mexico Inno Reporter
September 12, 2023
There’s a big gap when it comes to venture capital flowing to companies founded by Indigenous people. Specifically, only 0.004% of the approximately $330 billion in venture capital invested in 2021 went to Indigenous founders, according to data from the VC website Crunchbase.
Skoden Ventures, a Santa Fe-based venture fund that launched in April of this year, wants to play a role in filling that gap.
The fund — which gets its name from a slang term in Native communities for the phrase “Let’s go then” — plans to invest between $175,000 to $250,000 in early-stage creative and creative technology entrepreneurs. Those could be founders of companies across a broad range of areas, from jewelry and makeup design to beadwork to art and entertainment.
It’s a diverse swath of companies that don’t typically receive much venture backing or other entrepreneurial support, said Kelly Holmes, one of Skoden’s founding partners.
A Miniconjou Lakota woman from the Cheyenne River Reservation in South Dakota, Holmes launched her own creative enterprise, Native Max Magazine, when she was 20 years old. It’s the first and only magazine focused entirely on Native fashion and communities, she said.
“As a creative entrepreneur, I started my business with absolutely no funding, no outside resources, little tiny support,” Holmes said. “I really bring this experience to Skoden in wanting to provide what I needed as a creative entrepreneur myself at the very beginning of my business journey.”
Skoden, which has four advisors and four venture partners with two full-time staff and four part-time staff, plans to close its first fund in early 2024 and is targeting $10 million. It anticipates investing in about 30 companies, spread primarily across the Southwest.
Prados Beauty, a cosmetics business based in Las Cruces, is one example.
The Prados Beauty story
Cece Meadows, a Xicana and Indigenous woman of Yaqui and Comanche descent, founded Prados Beauty in 2018 in New York and relocated it to Las Cruces — the traditional homelands of the Piro-Manso-Tiwa people — when she and her family moved to the Southern New Mexico city in 2020. A trained makeup artist and cancer survivor, Meadows said she started the business to provide cosmetic products like makeup brushes and eyelashes to patients going through chemotherapy.
Those offerings have since expanded to include more cosmetic products like eyeshadow palettes, blushes and lipstick. In October 2020, Meadows launched a collection with Kiowa and Choctaw filmmaker Steven Paul Judd; a year later she kicked off another with Cherokee designer Kassie Kussman.
Meadows said she and Judd donated 50% of the profit from that first collection to Indigenous communities. That was during the height of the Covid-19 pandemic, she said, so money went toward purchasing personal protective equipment and other resources to help those communities better deal with the disease.
Such generosity would become a part of Prados Beauty’s ethos, Meadows said.
“It wasn’t just about a company making money,” she said. “It was about us making money and then giving it back to our community.”
Prados Beauty operates largely out of a 3,000-square-foot warehouse and distribution center in Las Cruces, where the business also has a storefront at 1825 Copper Loop. It sells its products on its website and at over 600 JCPenney stores.
Meadows wants her business to become “a household beauty name” — “high-quality products that are affordable, that tell a story and that give back to Indigenous communities.” But in order to continue scaling its products and sales, Meadows said Prados Beauty needs one primary thing, and that’s financial support. But not just any kind.
“It’s always money. It’s always funding,” Meadows said. “And funding that doesn’t strip you of your ownership. Funding that doesn’t cost you 30% or 40% of your business.
“Those are very sharky-type environments that most Indigenous entrepreneurs don’t work well in,” she added.
That’s where Skoden Ventures could step in.
How Skoden can fill a gap
To provide companies like Prados Beauty with more financial flexibility, Skoden offers different “equity structures,” said Alice Loy, one of the fund’s founding partners. That includes traditional equity investments as well as “shared earnings styled” equity investments — an agreement used as a substitute for other types of equity structures that normally doesn’t come with debt or a fixed repayment schedule, she said.
“By having a flexible suite of structures, we can work with a company like Meow Wolf that is pursuing extraordinary returns and has a global aspiration, but we could also work with companies that are growing 40% a year and want to create jobs here in New Mexico with New Mexicans,” Loy said. “It’s more flexible that way.”
Loy is the CEO and co-founder of Creative Startups, a nonprofit based in Santa Fe that has helped creative entrepreneurs raise over $300 million across a range of industries, with a majority of its investments going to those founded by women and people of color according to its website.
She and Holmes, Skoden’s other founding partner, came up with the idea for the creative-focused fund after seeing a lack of interest from investors in creative startups while at an accelerator program a little over a year ago. Skoden anticipates closing the first deal out of the fund this fall, Loy said, and it’s currently in conversation with companies that meet its “investment thesis.”
“A lot of creative entrepreneurs are interested in raising capital, but the traditional venture capital structure or norms can be a turnoff or can be obfuscated and hard to navigate,” Loy said.
That’s why Skoden wants to combine equity investments with resources that entrepreneurs can use to help navigate the potentially confusing capital landscape, Loy said. Its website includes tutorials on subjects like company valuations and social media strategy.
Its investments and resource-based support will be focused on a more holistic approach to measuring a company’s impact — not just its financial return. That might include, like in the case of Prados Beauty, giving back to a business’s community, or companies that want to help grow the culture surrounding their business, she said.
“Part of the reason some of the entrepreneurs we’ve been talking with are so excited is because they felt like they weren’t finding investors who spoke to that part of their business and their purpose and their vision for what they’re building,” Loy said. “It’s not just money. It’s more than that.”
Not the only one
Other organizations based in New Mexico are working to fill similar gaps when it comes to Indigenous entrepreneurship. The Future is Indigenous Women, a coalition between three such groups — Roanhorse Consulting, New Mexico Community Capital and Native Women Lead — held its inaugural Rematriating Economies Apprenticeship program in Albuquerque this summer. The coalition landed a $10 million grant in late 2021 to help fund its range of resources for entrepreneurial support.
And the Co-op Capital Program, an initiative out of Nusenda Credit Union, also helps fund Indigenous and undercapitalized entrepreneurs by partnering with other community organizations, like Native Women Lead.
“This isn’t just about business,” Vanessa Roanhorse, who founded her firm Roanhorse Consulting in 2016, told Albuquerque Business First in May. “We’re using entrepreneurship as a pathway, but we believe economic agency and mobility is possible if we put women back into positions of leadership and opportunity.”
Holmes, in addition to her work with Skoden Ventures, helps lead Creatives Indigenous, an entrepreneur program focused on growing Indigenous creative entrepreneurs and their businesses through a blend of programs and resources. She’s also a founding board member of the Native American Venture Capital Association.
Loy said that venture capital association is looking to create partnerships with other organizations across the country, including those in New Mexico.
“We’re excited for New Mexico organizations to get more and more involved in that,” she added.