Rayleen Brown has overcome many obstacles to start a small catering business, and now she could face one of the biggest yet: getting a loan from Australia’s private finance sector.
“I’ve always been a little afraid to enter that space,” she says.
The Arrernte and Ngangiwumirri woman started a company many years ago that pioneered bush food production in the Northern Territory.
Knowing many people’s reluctance toward homemade ingredients, Rayleen and her co-founder Gina added dessert quandong to baked goods and found ways to use marinade recipes passed down from her father’s relatives.
“We wanted to introduce people to these wonderful flavors that we love so much,” she says.
“People thought we were crazy. Back then it was more of a novelty.”
Their business, Kungas Can Cook, blossomed to include a cafe in Mparntwe (Alice Springs) and catering for city events. They hired other natives and channeled the money back into the community.
It was a huge achievement for Rayleen, who “grew up in public housing.”
“It’s really self-determination in a way,” she says.
After the failure of the pandemic, today the grandmother is trying to build her business again. She wants to set up a commercial kitchen in Mparntwe to produce pre-packaged bush food infusions for sale in shops and supermarkets.
To do that, Rayleen needs an injection of cash. It is here that First Nations finance experts say they will face many entrenched and institutional obstacles.
How many Indigenous entrepreneurs are there in Australia?
There is little reliable data on the size of Australia’s First Nations business sector.
ABS data collected from the latest 2021 census shows there are almost 18,000 registered Indigenous “owner managers”, which is not a fully representative way of calculating the true scale of entrepreneurs in the sector.
There are also about 19,000 people registered as directors of Indigenous corporations, but again, this is not a widely accepted measure.
Researchers recently noted the lack of data in a paper for the Reserve Bank of Australia.
“The best available evidence suggests that the number of registered Indigenous businesses and corporations grew by about 4 percent per year between 2006 and 2018,” wrote Michelle Evans and Cain Polidano of the University of Melbourne.
“The contributions of First Nations companies and corporations have rarely been mentioned in the discourse on the Australian economy.”
The researchers noted that one of the big factors driving growth in the sector was the Commonwealth’s Indigenous Procurement Policy, which was enacted in the past decade to encourage the federal government to procure jobs from First Nations.
In the financial year 2020-21. this led to 10,920 contracts worth $1.1 billion. Data for next year will arrive soon.
Meanwhile, separate data from Indigenous business organization Supply Nation shows its 700 members spent $3.8 billion with verified First Nation suppliers last financial year. That’s a 62 percent increase on the previous financial year and includes spending by government, not-for-profit organizations and corporate customers.
NAB’s major banking projects. The volume of domestic business will continue to grow at a rate of 4 percent until 2026, which is double the projection for the wider economy.
NAB positions itself as a leader in space lending, with many venture capital firms also creating funding sources for indigenous entrepreneurs.
However, First Nations business experts who spoke to ABC News are warning the financial sector to shape up and focus on targeting those who really need help.
Naomi Anstess is a business consultant who coaches First Nations entrepreneurs and small business owners, including Rayleen Brown.
The Erub and Gumroi woman, who was born and raised in Larrakia (Darwin) country, has a painful memory of her own interactions with the financial sector.
“I’m really stuck,” says Naomi.
Her memory includes going to the bank to get a $5,000 personal loan to buy her first car. She had a university degree and a job, and was initially told that she was “good to go”.
She then went to fill out the application forms and ticked the box that she was Australian, native. The bank asked this and refused the loan.
Naomi needed to return to the bank office – with her “fairer-skinned” father – to get the lender to change his mind.
“I felt this application of the stereotype that I won’t be able to pay back the loan,” she says.
It was two decades ago. But Naomi believes her clients still face a watered-down version of this institutional racism when accessing the financial sector.
“It’s a white boys’ club,” she says.
The first obstacle Naomi often sees for Indigenous entrepreneurs doesn’t come from wealth. It’s extremely difficult to get a loan or approach lenders for financing if you don’t have equity or assets to put up as collateral.
Take the example of the concrete startup from Darwin that Naomi is currently mentoring. They need $1.4 million to buy new equipment and grow.
“It’s really hard for them to get any capital,” she says.
“Aboriginal people generally don’t have any intergenerational wealth, and that’s because of dispossession. It creates an inability to grow.”
This is the experience of Morgan Coleman, a tech entrepreneur with Torres Strait Islander heritage, who grew up in Dja Dja Wurrung and Taungurung (Bendigo) country.
It reminds of a saying in the start-up world.
“Your first chunk of money comes from the three Fs: friends, family, and fools. Well, I don’t know any fools. I have friends and family, and they lack intergenerational wealth.”
Nevertheless, he created an app that helped pet owners quickly access veterinarians. At its peak, Vets On Call was turning over $500,000 a year.
Morgan needed money to develop the app. He never went to traditional lenders because he knew he had no collateral. So he tried the venture capital (VC) route instead.
VC is where funds invest money in promising young startups. Morgan dropped to about 80 and was brought back.
Landing a VC is difficult for all entrepreneurs, but Morgan especially felt the lack of a “wealth network” to open doors for him and believes those who opened them “with good intentions” did not understand the cultural differences.
For example, he says, he felt many board members didn’t understand that some Australians, indigenous peoples, might not feel comfortable crowing about the future of their idea when “they’ve been conditioned not to do it their whole lives”.
With no capital, Morgan sold Vets On Call. Now working on another app.
ABC News reached out to one VC firm, Blackbird, which has backed Morgan and several other Indigenous entrepreneurs through mentoring arm StartMate.
“There are more Indigenous Australian entrepreneurs than ever (but) the funding they’re getting isn’t keeping up with this rate of innovation,” Blackbird co-founder Rick Baker noted.
“It’s clear that VCs and the startup sector in general need to do more to make Indigenous-founded businesses succeed.”
So what about the big banks?
As with venture capital, there is little data on how many traditional lenders such as banks support Indigenous Australian businesses. ABC got close to the big four and no one was willing or able to disclose funding rate data.
NAB positions itself as a market leader. It recently appointed its first Indigenous business and banking expert, Adam Fletcher.
The Gringai man from the Wonnaru Nation (Hunter Valley) is well aware of all the obstacles his people face before coming to the $97 billion bank for financing.
“Historically, we have been systematically excluded from the financial industry,” he says.
He wants to work more with startups, but says it’s difficult for a bank or equity firm to back any type of business that gets a loan without collateral.
One example NAB gave ABC News of an entity it recently funded shows the path many indigenous corporations must take to grow.
The Bawrunga Medical Service was established in regional NSW decades ago and is run as a not-for-profit organisation. It originally received government funding before becoming self-funded through the crowdfunding method.
Bawrunga recently went to the Commonwealth body set up to finance Indigenous business, the IBA, seeking a loan to open a new building. However, its executive director Leavina Reid says they were turned down.
IBA records show it has provided $280 million in business financing to First Nation businesses and entrepreneurs over the past 5 years.
In a statement, the IBA told ABC News that “it is important that the companies we invest in are at a stage where they are ready”.
Eventually, Bawrunga was placed in NAB’s domestic banking team. This is where they ended up getting the $1.2 million they needed to grow.
Leavina, an elder of Kamilaroi descent (northern NSW to south coast Queensland), says the bank “cut out a lot of red tape” for an Aboriginal organization like theirs and they were culturally appropriate.
“It gives me great pleasure to be able to sit here and to be able to talk about our journey,” she says.
Other major indigenous corporations ABC News spoke with are hoping for a similar journey.
Andrea Jackson runs another nonprofit, Maraway, which was built through grants.
Andrea is grateful for government support, but says it can be restrictive, burdened by changes in federal or state leadership and comes with conditions.
“Funding doesn’t allow you to accumulate cash or physical assets that can then help you fund yourself. And so you’re basically stuck in existential poverty as an organization,” she says.
Maraway used the Commonwealth Bank to refinance a property loan a few years ago and hopes the bank can do more.
Andrea’s sentiments are echoed by Alastair King.
ALPA’s CEO believes Indigenous business has been shut out of major financial institutions for so many years that a perception has developed that growth cannot come without government.
Alastair worked to divert ALPA from that route. With limited help, he was able to build 15 remote shops, but it took five decades.
The indigenous corporation only got its first loan from a bank ten years ago. A $15 million loan from NAB enabled the construction of a warehouse in Darwin. It has since paid off.
He believes the financial sector is getting better at helping the country’s first people succeed.
“The change we’ve seen over the last decade is welcome. Let’s keep it up. Be proactive, not reactive,” says Alastair.
From the small kitchen allocated to her by the university in Mparntwe, Rayleen Brown of Kungkas Can Cook hopes to somehow get a loan to go further.
After being turned down for a loan by an Indigenous funding body, Rayleen believes her last hope is to work on a further business plan with Naomi Anstess and seek private sector money.
“There is so much for our next generation to look forward to and I really believe that these private companies and banks should really give us a chance,” she says.