Maori Innovation Fund set up to help high-growth businesses

June McCabe.

Eight Maori tribes have come together to set up a venture capital fund of $50 million to $70 million aimed at lifting Maori out of their long post-colonial status as the nation's labourers.

The new "Maori Innovation Fund" will seek investments from mainstream financial institutions, wealthy individuals and the Government-backed NZ Venture Investment Fund, but organiser June McCabe says the eight iwi (tribes) will play "the lead role".

The funds will be invested in "young high-growth Iwi Maori businesses" across multiple sectors including primary industries, tourism and energy.

Maori Economic Development Advisory Board leader Ngahiwi Tomoana, whose Hastings-based Ngati Kahungunu is one of the eight iwi involved, said the fund aimed to give iwi and Maori entrepreneurs confidence to engage with the financial sector.

"It's about growing confidence in ourselves that we can be part of the financial sector too," he said.

"It's an indicator to our people that we are not restricted to being manual workers any more. We are now trying to be generic across every sector."

The fund is also a sign of the tribes' growing economic power, fuelled in part by settlements of longstanding compensation claims for loss of land and other resources since the Treaty of Waitangi in 1840. The Government has paid over $1.2 billion in redress since 1990, with the last big claims including that of the country's biggest tribe, Ngapuhi, expected to be settled soon.

A 2010 study valued the total Maori commercial asset base at $37 billion, including $11 billion controlled by tribal entities and $26 billion owned by individual Maori employers and self-employed people.

But Te Rarawa leader Haami Piripi, another backer of the new fund, said development had been held back because mainstream banks have been reluctant to accept collectively-owned land as security for loans.

"Banks are refusing to lend on Maori land. There is no practical reason for it, they just don't want to do it," he said.

Ms McCabe, a former top Westpac executive who affiliates to Te Rarawa and other northern iwi, said the new fund aimed to bridge the gulf between mainstream investors and Maori landowners.

"The idea came from the fact that there is not a lot of expertise in the financial markets specifically on Maori investments and how they work," she said.

"There is also a lot of talk about doing deals with China, but many investors from offshore come here and don't know where to go. If you want to accelerate the growth of the Maori economy, well you have got to create the mechanisms and the instruments to enable that."

Her business plan says the fund will target investments of $1 million to $3 million in early-stage and expanding businesses and management buyouts through a mix of share capital and loans.

It will aim to sell out and transfer management to Maori entrepreneurs or business interests within eight to 10 years.

NZ Venture Investment Fund chief executive Franceska Banga said she was providing advice on the new fund but it was too soon to say whether the VIF would invest in it.