MicroGREEN Polymers Raises $10M From Increasingly Active Tribal Investors
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proximity. After receiving an order from the Stillaguamish-owned Angel of the Winds in Arlington, MicroGREEN invited tribal representatives to visit its factory.
Koran Andrews, CEO of the Stillaguamish Tribal Enterprise Corporation, took a tour last year and recognized an investment opportunity in keeping with her organization’s goals of economic diversification and long-term sustainability. Bill Lomax, president of the Native American Finance Officers Association (NAFOA), says of the Stillaguamish: “For one of the smaller tribes in the country that maybe doesn’t get out into the national media as much, they’re probably one of the savviest.”
Malone says Andrews opened his eyes to the opportunity presented by the growing economic might of American Indian tribes. And it was the Stillaguamish who introduced MicroGREEN to the Confederated Tribes of the Grand Ronde at a conference in Seattle earlier this year, says Titu Asghar, director of economic development for the Oregon-based group of 27 tribes and bands.
“MicroGREEN’s philosophy aligns with the tribe’s philosophy of returning back to the Earth, being ecologically sustainable, looking into green investments,” Asghar says.
Those goals inform the Tribe’s investment focus, along with a geographic concentration on historic lands forcibly ceded in the mid-19th century, which stretched from Northern California, through the mid-Willamette Valley, to southwest Washington.
The Confederated Tribes formed an economic development arm in 2011 as a way to diversify and invest revenues from casino and timber operations. It made direct equity investments in two other companies in 2012 and is exploring a few more opportunities currently, Asghar says. The Confederated Tribes target investments in the $5 million to $10 million range, in companies that are sustainable environmentally and economically, with stable management and cash flows. He would not disclose the size of the fund to be invested.
Rather than investing as a limited partner in an existing private equity or venture capital fund, the Confederated Tribes decided to keep their investing activities in house, performing their own due diligence and relying on existing legal, finance, and public relations capabilities. That’s part of being good stewards of tribal dollars, a responsibility the Tribal Council—which has final say in all investments—would never leave to outsiders, says public affairs director Siobhan Taylor.
Malone says companies seeking investment from tribes must be aware that each one is different.
“One step is getting to know the tribe, getting to know particularly the decision-making process and the leadership council,” he says. “It’s also an investment based not only on due diligence, but also on trust in the management team. Getting to know them, them getting to know us—that’s very important to both parties.”
While they may indicate the beginnings of a trend, the Stillaguamish and Confederated Tribes’ direct investments in a cleantech manufacturer remain relatively uncommon nationally, says Lomax, of the NAFOA. “We haven’t seen necessarily a lot of investments like that to my knowledge,” he says. “We’ve certainly seen a big interest in clean energy.”
In the past, few tribes had much extra money, so venture capital investing wasn’t relevant. “And then the casinos came along and that created wealth for a great number of tribes,” he says.
In 2012, Indian gaming revenue was $27.9 billion, according to the National Indian Gaming Commission.
“We’ve seen a real evolution in the tribal acumen when it comes to investing over the last 10 to 15 years,” Lomax says. Over that time, tribes have accumulated significant wealth from their casinos and associated businesses. They are now looking to broaden their portfolios beyond plain vanilla investments in stocks and bonds, he says.
One of the most sophisticated efforts is Growth Fund Private Equity, the Durango, CO-based business investing arm of the Southern Ute Indian Tribe, which has invested in technology companies including Seattle-based RFID systems maker Impinj.
“I think generally, a lot of tribes are now starting to make allocation to passive private equity and venture-type investments,” Lomax says, though he cautions that tribes aren’t moving to this kind of investing en masse.
As in the case of MicroGREEN, tribes tend to focus investments locally, which makes them a promising emerging source to support local innovation, particularly in sustainability and cleantech, he says.