Welcome to Drumbeats, the must -listen -to podcast
which explains why Indigenous partnerships are
the key to securing successful outcomes in natural
resource and infrastructure investment in Canada.
I'm Mark McNacca, and today Rob and I are joined
by Jeffrey Sear, founder and managing partner
of Raven Indigenous Outcome Funds, the team pioneering
outcomes -based financing in Indigenous communities.
Jeff has built the first Indigenous -led outcomes
investing platform of its kind, a model well
worth looking into. One that blends government
purchasing, community leadership and private
capital to deliver projects. For example, his
team has launched a $50 million Indigenous Outcomes
Fund, raising $20 million in its first close
and raising over $30 million shortly thereafter.
with capital already flowing into 7 to 10 projects
across Manitoba, Saskatchewan, Alberta, Ontario,
and Quebec. As an example, they've retrofitted
125 homes with geothermal systems, hired and
trained local Indigenous crews to deliver the
work, and generated a 4 % return delivered early
to investors, a first -of -its -kind Indigenous
outcomes financing success. This will be a two
-part podcast. In this part one, you'll learn
how Jeff turned a problem into an opportunity.
It's the origin story behind a model now scaling
across the globe, including Canada. Let's dive
in. Jeff Sear, founder and managing partner,
Raven Indigenous Outcome Funds. Welcome to the
podcast. Thanks, Mark. Good morning, Jeff. Thanks
for joining us. Yeah, happy to be here. Gratitude
for reaching out to have me on your podcast.
Why don't you tell us a little bit about your
background? And now I understand you're in Quebec,
and you can also please tell us about something
you're wearing, because I think there's a good
story there for our listeners. Oh, yeah, sure.
So, Tanchi Ani Bojo. My traditional name is Kinuken
and Nene, which is Eagle Man Leading. I'm from
the Métis Nation of the Red River Valley, southern
Manitoba. That's where my traditional territory
is, and I traditionally harvest and go back there
to do that quite regularly. And as Raul pointed
out, I live... Now in Mont -Tremblant, Quebec.
I went the other direction in my living choices.
And I'm a founder and managing partner of Raven
Outcomes, to short form, and CEO of the Raven
Indigenous Impact Foundation, which is an ancillary
arm of the work we do and an important part of
the blended finance capital stack that we need
to do in Indigenous communities these days. We
can get into that if you like. Today, I'm actually
wearing a traditional Métis beaded vest. which
was done by my father, who was a Métis elder.
He passed away last year. This is one of the
heirloom I'm really bad at beading. I don't do
that. My wife, who's also a Métis from Saskatchewan,
she beads, so she's picked up some of the artwork
along the way. But it's important to me, and
it's important when we have these conversations
to make sure that we represent who our communities
are, who we are in that space. Yes. Beautiful,
Jeff. And tell us how you came to be CEO of the
Raven Outcomes Fund. Tell us a bit about your
background and what got you into the investment
sector in the first place. Yeah, great question.
I wish it was a straight path and an easy answer,
but of course it never is. Life doesn't play
that way. I actually started out as a political
economist and a negotiator. And I worked, you
know, on First Nations rights and land claims
and then on Métis rights and land claims and
did a lot of work in that space, leading negotiation
teams and policy teams around self -government
and self -determination, those things that were
important. That takes you back about 20 plus
years ago that I started doing that. And then
did a tour with the federal government where
I was asked to come in and draft. legislation
and lead consultation and then work on the implementation
of supreme court decisions and a fed prof and
indigenous community levels of tripartite i left
there and i'm going to try to make this brief
for your podcast um to go work at what was then
called the national association of friendship
centers as their ceo and that's all the friendship
centers in canada who are in urban environments
there's about 110 of those plus provincial associations
what i would call the the really pointy end of
the stick of service provision and indigenous
communities really dealing with um tricky stuff
on the ground housing homelessness food jobs
you name it um and a wonderful experience for
for seven eight years but the that's where the
story of I take off into the investment space
came from, I got out of the Friendship Centers,
but while in the last couple of years I was there,
I ran two Indigenous Innovation Summits, one
in Winnipeg and one in Edmonton. And really what
we're talking about is the social and financial
innovation ecosystem that was burgeoning around
the time of 2015, 2016, really at the end of
the TRC report. the Truth and Reconciliation
Commission in Canada, and looking at all these
gaps that we had, socioeconomic gaps, capital
gaps, you name it. It was all existing, and I'm
sure you've heard this podcast before. And in
that period when I left the Friendship Centers
and we had these summits, a lot of Indigenous
entrepreneurs and then communities approached
me as a known sort of quantity, I think, in the
ecosystem to say, hey, we're missing capital
for X, Y, and Z. And in different forms. That's
Indigenous -friendly. That's somewhat patient
and is responsive to actual Indigenous needs.
So it's not capital doing what capital wants
to do, just being extractive of profit. But capital
that actually works for our people. This is the
story behind outcomes, really. So back then in
2016, 2017... I founded Raven Indigenous Capital
Partners. So the first global Indigenous -led
VC firm, venture capital firm. We did two funds,
had a couple of business partners, the First
Nations and a non -Indigenous business partner.
At the time, we scaled that up to do a couple
of funds, Canada to the US, and it's doing pure,
what I call pure venture cap work, right? So
if you think venture capital deals with enterprises,
it deals with businesses, and the thing that
they're making, the service that they're providing,
and how they want to scale that, it's driven
by a certain sort of economic and financial reality.
As patient, as flexible as we could make it,
there's still some realities behind the model.
Approach my community to say, look, we really
want to solve self -determination of indigenous
clean energy on our reserve and reform our housing.
So this is an issue that's generally been in
the bail wick of governments, right, of statutory
responsibilities. And I was approached by a number
of foundations in Indigenous communities who'd
been working on some geothermal work and got
stalled. They'd done like a $10 million worth
of geothermal work and then got stalled out by
the federal government. And I, at the time, was
working in a process with a bunch of folks and
said, you know what, the capital is just flowing
in the wrong way. The wrong people are responsible
for doing the wrong things on the capital stack.
So it's not working for the community. And the
community is always left trying to pick up the
bag. There's never enough capital to do the things
that you want. And so I guess I kind of wedged
myself into doing something I didn't anticipate.
So on the side of my desk, while I was doing
venture capital investing, I started building
what would then become the first community -driven
outcomes contract in Peguas First Nation and
Fisher River, sort of in central Manitoba, to
do 125. housing retrofits and geothermal unit
installations, which, to be honest, they were
doing these at the pace of about one or two a
year on different reserves across Canada. And
so we did the 125 in just over two years. COVID
started to get in the mix, so some things got
slower as we went through it. And that turned
out to be successful, really successful. And
then my phone really started to ring. And not
from where I thought it was. When you say successful,
how were you measuring that? In a couple ways.
First of all, we installed 125 units and retrofitted
125 on reserve housing. So this is a housing
owned largely by band councils, right? Very little
private ownership at the time, or still is, as
you know, the legal situation in Canada on res.
But so we have this like... Trailing issue in
Canada of housing stock. We don't have enough
houses. We really don't have enough on reserve.
And so you have multifamilies and dwellings.
And it's really tough on the housing stock. It
really beats it up as well. So you're not getting
it, even though there's government programs in
place to somewhat address. It's never enough
and it's never timely and it's never done in
a way that the kingdom can really access it.
So success looked at doing it, hiring local people
to have HVAC level jobs and management jobs because
they would actually manage it. It would be direct
investing in the community. It would be reducing
energy bills by 50%, reducing greenhouse gas
emissions, and increasing the longevity of the
housing stock by at least two to three decades,
if not more. And we're in the process of measuring
how you get to that. So you had all these combined
impacts. So you have outcomes, but then you have
direct impacts for the community as a whole.
And then there's all kinds of tertiary impacts
that would emerge, right? So houses that never
had air conditioning all of a sudden got air
conditioning with you. So things are starting
to kind of change at the community level. Even
like things that you don't think about at first,
like band councils are on block funding. So they're
funding all this stuff under one single block
of funding from the federal government. So if
you reduce housing costs, so energy, for example.
to 50 % of what it was. They saved that money
and then could put it in education or job care
or whatever they want. So there's a tertiary
effect on the local economy as well. So a bit
of a long -winded answer, Rob, to your question,
but there's a lot of... And we paid investors
back 4 % on that one. I was going to ask, yeah,
from the investor's perspective. Wow. And we
did 4 % because we... At the time, I didn't really
understand what the market was going to be. So
we started market building. And we're like, well,
let's not give egregious returns and then have
everyone rush into it like an AI goldmine and
throw money at it. Because that's a problem from
past indigenous communities. So let's kind of
take a stepped approach, a staged approach to
it. But the investors were happy. Because they
were taking a risk on something that hadn't been
done before. And it paid it back in just under
three years. I love the fact that you got the
community involved too and a bit of ownership
of the resolving and solving the problem. It
wasn't just hiring, putting money in, hiring
contractors to come in and retrofit and then
leave. It sounds like it was community involvement
all the way through. Yeah, one thing I would
say about that is those skills and that body
of workers then went on to do other. So, for
example, in Fisher River, they went on to put
geothermal in the gym, the car wash, the laundromat,
and then the big school that fun got. And it
was their workers who did it. So this self -determination
piece becomes critical in the long -term trajectory
of the community. because we had a leaky bucket
economy before right as you said rob contractors
would come in but the real profit poured out
after the work was done and none of the skill
was left over so trying to solve for that at
the same time yes what about the investors who
secured that return can you describe what type
of investors did you have yeah those those early
investors um were not your big institutionals,
of course, and they wouldn't do that. It was
family offices, high net worth individuals, foundations,
community foundations as well came on board.
Those were the ones who said, yeah, we need better
outcomes. And so let's, and this, we're not talking,
I think the first investment pool was just shy
of $5 million for that, right? And so we're not
talking, it's not insignificant, but it's not
huge. Correct. And so most of those later on
became investors in our first fund. So they had
a great experience and then kind of laddered
into. We can talk about the fund after. Yes.
And what money funds the repayment? He said investors
are repaid with interest if money is going into
the retrofit. Right. The way that it works is
the repayment, or what I call the outcomes purchase,
or in financial terms, Rob, a takeout buyer is
a good way to think about it, is different levels
of government. And so in this case, it was the
federal and provincial government. So what we
end up doing, and in every single outcomes contract
we've had, we've always had stacked outcomes
purchasers. One of the reasons, well, we can
get into that. So they have programs that they
have put in place to do some of these sort of
work with very low take -up and very inconsistent
take -up. And for a variety of reasons. One is,
I think, the relationship capital you need to
work in Indigenous communities and to work at
scale. And so everything that was going on before
was just one -offs. One house would have, so
let's, I think an example is helpful for your
audience. You're on Fisher River First Nation.
You want to put in a geothermal system in your
home and do a retrofit of the house. And it's,
you kind of need to do both. Like it doesn't
make a lot of sense to do a geothermal system.
You're producing great energy heat and then have
it go out doors and windows and rooms and things
like that. Previously, what you would have to
do is you would have to apply as an individual
home tenant or as the first nation on an individual
home. So just think of the paperwork that starts
to ensue. To someone like the Canadian Mortgage
and Housing Corporation and their Section 95
programs and to a provincial entity. So in Manitoba,
that's Efficiency Manitoba, which came out of
Manitoba Hydro, but this is a self -standing
body now. And they have subsidies, rebates. and
full -on granting at times to do this work. But
the problem was it was never coordinated and
that you, the home occupant, would have to put
out a typical geothermal system. Geoexchange
system would probably cost nowadays $31 ,000.
So you can take out of your pocket $31 ,000 and
think of what we're talking about here for an
economic situation on RAS. It's just not. So
of course you're doing one or two a year. If
you're lucky. Yes. And you'd have to fill out
all that paperwork and be adept at doing it and
hire the contractors and make it all happen and
then get approval from the housing authority.
So that's what the problem you're kind of solving
for. So we come in and said, we're going to do
125 in just over two years. People are like,
whoa. But we've never really. So folks like CMHC,
and kudos to them, by the way, they were extremely
great to work with. And so was Efficiency Manitoba.
said, can we please work at scale? Let's do lots.
And so Raven ends up being the relationship interlocutor
and the capital provider at the front end. And
then governments use their statutory programs
and other things, and we pool the capital and
act as an outcomes purchase upon verification.
So hopefully I didn't confuse that too much for
everybody. No, not at all. And just for our audience,
CMHC is Canada Mortgage and Housing Corporation.
So really good to bring things together like
that because that's what happened. There are
good initiatives. There are good programs. But
when you're doing them one by one, I mean, on
a reservation or not, $31 ,000 is a lot of money.
And the paperwork, we all know it's just a nightmare.
So when you can do it at scale, that's fantastic.
And then you built the reputation for your first
fund. Right. And I think. The capital we've managed
to pool kind of on a per home basis was probably
about 70 ,000 per home. So that ends up being
a significant retrofit. And, you know, it has
health implications too, because you're removing
black mold and you're getting airflow. And so
all these implications that kind of fall from
it. So I think that's what got people excited.
Yes. And then you change the community, what
it is to grow up and live in that community,
because all of a sudden, It's gone from terrible
housing conditions, right? Your housing conditions
start to be good. Then you have time to concentrate
on other things because you're not just fighting
to survive, right? You're thinking, okay, how
can I grow and develop? And as you said, you
brought capacity and capabilities into the reservation
where none existed before. Now they have these
opportunities to go around. How can we make our
community even better, even stronger? Yeah, and
we've seen that. call it consequences or benefits,
where we, you know, there's a story of an elder
in the community had her house, one of the first
ones. The community usually prioritizes the elders,
by the way, to do the houses first. Because we
let them prioritize what's going to get done.
She said, hey, I got air conditioning in the
summer, so now what's happening is all the grandkids
are coming over and they're friends. And they're
hanging out at the grandkids' house. And what
happens is then grandma starts telling stories.
And of course, storytelling is transmission of
traditional knowledge. So there's a cultural
impact too that kind of occurs ancillary to the
direct benefit of, I don't know, getting 4 %
return on your investment or putting a geothermal
system in, which is where the exciting part happens,
which is what I mean being closer to the impact,
which I love personally. That's why we do the
work. Does that particular program continue?
Yeah, it does. It continues in the fund. And
it's matured, which I think is important. If
you're talking about market readiness, it's a
maturing thing. So we put the first fund together,
Raven Outcomes, Indigenous Outcomes Fund 1, which
is targeted as a $50 million fund. We raised
the first $20 million. So late 24, so fall 24,
raised the first $20 .4 million. And then next
week, we'll do the second closing at $33 million,
going to $50 million by the end of Q2. And I
can say that momentum and interest from investors
has picked up radically. So that's good. But
when we put the fund together, we already had
interest from communities and from outcomes purchasers.
So the question was investors. And that actually
happened fairly quickly. I think people saw what
it was. It's a new investment vehicle in a way,
in a way. So once we got over the first hurdle
with explaining it, we're now moving from what
I would say foundations, family offices, smaller
financial institutions into the institutional
institutions. It's a lot of institutional words
there. if you get my drift on where that's headed.
And so we're starting to see the ticket size
go up on investors coming in. Now, what it led
us to your question, Rob, where it led us is
we did a early investment in Sioux Valley Dakota
Nation, which is 25 units. And we warehoused
that deal before the fund closed and then brought
it into the fund about three months later because
they wanted to do work. And you're still dealing
with construction seasons. Manitoba is particularly
cold. And then we signed a second deal at Broken
Head Ojibwe Nation for 100 units, about a $7
million investment. And we have another investment
in Onion Lake in Saskatchewan and Alberta. And
Onion Lake is different because it's home solar
and retrofit. And we're agnostic on the energy
source or what that is. We're just interested
in the impact on communities. But it also crosses
the Alberta -Saskatchewan border, the First Nations
across the border. So you're dealing with two
provincial entities and the federal entities.
So it's slightly more complex, mostly for us,
in doing it. And then we have one in Ontario
that's pretty much ready to go, another one in
northern Manitoba, then one in Quebec that we're,
in Kahnawake that we're looking at. So that stuff's
moved fairly rapidly forward. Yeah, and I'm excited.
I'm excited to get going on it. It is exciting.
In 2023, Jeffrey Sear and his team at the Raven
Indigenous Impact Foundation, working alongside
the Sorensen Impact Institute at the University
of Utah, released a report, The State of Outcomes
-Based Finance in Canada, which we're now going
to talk through in detail. It provides a critical
overview of the OBF opportunity for Canada compared
to its peers. The key feature of outcomes -based
finance is the alignment of financial incentives
with positive social outcomes. Investors provide
the upfront capital required to deliver, taking
on the financial risk. If the predetermined outcomes
are successfully achieved, the government pays
for the results. The investors will then receive
their capital plus a return on their investment.
This structure not only encourages a focus on
effective evidence -based interventions, but
also provides a mechanism to pay for results
rather than simply for services delivered. Globally,
outcomes -based finance, OBF, is already proven.
It's been many years since the first social impact
bond was launched. In Canada, outcomes -based
initiatives have been successfully launched in
Nova Scotia, Quebec, Ontario, Manitoba, Saskatchewan,
and British Columbia. In terms of focus areas,
workforce development is the most covered area
with six OBF contracts structured in the recent
past. Other focus areas have included education,
environmental, social welfare, health, and criminal
justice. In recent years, there's been a noticeable
increase in the number of environmental -related
OBF contracts, all of which have been Indigenous
-led. Consistent success factors across projects
are numerous. strong data collection and management,
political champions, central coordination, capacity
building for service providers, durable stakeholder
partnerships, adaptable contracts, and most importantly,
alignment between purchasers and communities.
There are challenges with the OBF model, which
is not widely understood in Canada, of course,
around the globe. Integrated into policy and
procurement is challenging. can be complex leadership
turnover can also slow momentum however what
is clear is it delivers results so as canada
goes through this transition outcomes -based
financing is emerging as a credible and proven
alternative the potential is strong the ecosystem
needs to be strengthened obf has already attracted
Hundreds of millions of dollars in capital. According
to publicly available information, the UK leads
the OBF market with over 90 transactions worth
about $100 million in terms of capital. In the
US, although there's been fewer number of transactions,
approximately 25 at the time of the report, it's
attracted over $200 million in capital. Canada's
initial efforts. have been primarily driven by
the Manitoba Social Innovation Office, SIO, and
a select group of other practitioners in recent
years. The implication is not that Canada lacks
the capability. The implication is there's a
huge opportunity in front of Canada and all Canadians
to apply the OBF model successfully from C to
C to C. So if we look at the number of OBF initiatives
internationally versus where Canada's initiative
has been focused, we can see workforce development,
social welfare dominate the initiatives in other
geographic regions. However, in Canada, the mix
is slightly different. That's partly because
we're just getting going in OBF in Canada. And
we're looking forward to the work of Jeffrey
Sear and his team at Raven to drive this model
across the country. But you can see Canada has
had a lot of focus on workforce development.
And then rather equally distributed against...
other types such as social welfare, health, education,
criminal justice, but want to reinforce in Canada
something very unique is those environmental
and agricultural projects are primarily all Indigenous
-led. So I'm sure over time, this picture for
Canada will change, may match with its peers
globally, but it demonstrates the opportunity
in front of Canada, but also in front of... the
Indigenous peoples of Canada, to use this model
to achieve their rightful place in Confederation
and in the development of the country. Thank
you to Jeffrey Sear for sharing his insights
with us, and thank you for viewing and listening.
Mark your calendars for the upcoming 2026 Summit,
taking place on the 8th of April. Be sure to
share, subscribe, and leave a review on your
favorite podcast channel. Thanks for listening
to Drumbeats. Until next time.