Hawaiʻi's Technology Community
Do you care about Act 221/215?
Some folks are concerned that the Leg will let 221/215 expire in 2010 and either not renew it, or renew some Frankenstein that will render the benefit ineffective.
I'd like to know how the Entreprenuers here feel about Act 221/215.
1) Do you make use of it?
2) Would you be willing to fight for it?
I'd like to know how the Entreprenuers here feel about Act 221/215.
1) Do you make use of it?
2) Would you be willing to fight for it?
Views: 134
Replies to This Discussion
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Permalink Reply by Daniel Leuck on
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1) Do you make use of it?
We plan to make use of it with our new ooi social networking venture.
2) Would you be willing to fight for it?
Absolutely! -
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Permalink Reply by Peter Kay on
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Good to hear. Though my choice of words "fight" were probably a little off, it's going to take a concerted communication effort to see to it that 221/215 gets renewed. I'll keep you posted.
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Permalink Reply by Ken Berkun on
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I have mixed feelings about Act 221. Is it really the best use of state money? Perhaps we would be better off spending directly on education (sadly underfunded in this state). But on the other hand, I fully expect to take advantage of the act. It will probably be the thing that ultimately keeps us in the islands.
Fight for it? I'm not sure - I would tell how it is of use for us and let people draw their own conclusions.
ken -
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Ken, 221/215 going forward is not a matter of people drawing their own conclusions as it won't be a "people" issue. It's going to be a legistlative issue and there are various interests which will promote their own agenda.
I'm unclear as to whether or not you would want to participate in the group that puts forth the effort to extend 221/215. -
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Well, I guess I am not sure that I would be on such a committee. As much as I hope to benefit from Act 221 I am not sure it is the best solution for the state. If we do end up receiving tax advantaged money (and we should know by fall), then I would be happy to go on record as saying that "we wouldn't be in Hawaii if we hadn't received Act 221 money". I'm not sure I'm willing to go beyond that. But I'm happy to discuss further.
Ken
3 "not sures" in one paragraph! -
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Permalink Reply by Virendra Nath on
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Ken Berkun said:Well, I guess I am not sure that I would be on such a committee. As much as I hope to benefit from Act 221 I am not sure it is the best solution for the state. If we do end up receiving tax advantaged money (and we should know by fall), then I would be happy to go on record as saying that "we wouldn't be in Hawaii if we hadn't received Act 221 money". I'm not sure I'm willing to go beyond that. But I'm happy to discuss further.
Ken
3 "not sures" in one paragraph!
Hi:
It is not at all clear that Act 221/215 investments "cost" the State money - even in the short run. Many Act 221 ventures bring in significant $$ from out of state, money that has to be spent in Hawaii, mostly on salaries - which are taxed - and then on consumption - which is also taxed. Plus, in the long term, those ventures result in income taxes and capital gains taxes to the State, as the ventures begin to succeed. A linear view of this Act is probably misleading. IMHO. -
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Permalink Reply by John on
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I do not make use out of it and I am reluctant to do so. My concern is that it attracts poor quality money, that is to say money without strategic value in building the business. I have asked around and heard a number of such stories. Also, an article in Hawaii Business Magazine reinforced that concern.
Personally, bootstrapping is going well for me and if I needed investment I am fairly confident I could secure through mainland connections.
I have not taken the time to carefully review the matter so I do not have a strong opinion on its value (nor obviously a deep understanding). However, I have enough concerns that I feel it's prudent for me to stay away from this option. -
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Do the math:
$5 M raise:
$2.5 M local
$2.5 M mainland
States matches $5M - that's $5M of taxpayer money. Think of the teachers you could pay!
Now, a certain percentage of that is spent locally - but not all!
The company may make money, which is then taxed.
And there is 2nd hand economic activity.
All this is good.
But is it the best use of the money? I do not know, but I think that if you are pro 221 you better have some good figures to indicate that this is the best thing you can think of to drive high tech growth in this state! I do think better stats should be required of companies receiving this money and the stat should report accurate numbers.
I don't buy the good money/bad money argument. Yes, smart money is better than dumb money, but money is money.
Ken -
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I have lived through dumb money twice. Once from a VC that was supposedly excellent but unfortunately totally misread our space. Dumb money can force you into very bad strategic directions or impose unrealistic expectations that the management team cannot meet. Smart money, on the other hand, can help you find an optimal strategy and the investors can provide critical introductions or branding to get you key partnerships or wins.
In my experience, smart money can be worth many more times than dumb money. That, of course, does not mean you cannot find smart money with 221. However, I would recommend you be very careful about getting smart money. -
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100% agreed. I've seen this happen many times. With ooi we aren't taking money until we have a public beta and a few customers. Nothing can kill you faster than dumb money and dumb weight.
John said:I have lived through dumb money twice. Once from a VC that was supposedly excellent but unfortunately totally misread our space. Dumb money can force you into very bad strategic directions or impose unrealistic expectations that the management team cannot meet. -
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I agree. The idea is to create a healthy ecosystem of technology companies that provide good jobs. This ultimately provides more tax revenue. This sort of thing doesn't happen overnight. You have to take the long view.
Virendra Nath: It is not at all clear that Act 221/215 investments "cost" the State money - even in the short run. Many Act 221 ventures bring in significant $$ from out of state, money that has to be spent in Hawaii, mostly on salaries - which are taxed - and then on consumption - which is also taxed. Plus, in the long term, those ventures result in income taxes and capital gains taxes to the State, as the ventures begin to succeed. A linear view of this Act is probably misleading. IMHO.
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Ken,
The "think of the teachers you could pay!" sounds good and feels good, but in practice is absolutely moot. Ask the DOE what kind of raise a $2M infusion would buy. Zero. Second point on education: there is essentially no correlation between higher spending on public schools and better education.
IMO 221/215 tax refunds are probably the best, most efficient money the state has ever spent. I'd love to see the numbers behind ANY state-driven economic diversity program that has done more or cost less. -
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