Bill Spencer Leaves the HVCA

Comment

Comment by Frank Bachinsky on February 25, 2014 at 3:25pm

My comment on the size of investment capital is based on creation of a financial ecosystem that covers a broad range of industries and funding stages. It may sound like a lot if you think about the current activity but it isn't a lot when deployed across every type of industry and stage. Try doing project finance for something that isn't an app, a solar panel or a condo complex. The risk dollars are non-existent right now in Hawaii.

Comment by Jason Rushin on February 25, 2014 at 3:11pm

I agree with @Frank - there's been very little venture capital moving around within the state over the past few years, which is (I guess) why HVCA has become more focused on general business programs. The Act 221 talk kind of reinforces that point in that it wasn't really "venture capital" as much as it was a tax break, and it's been the only thing we have to reference. And, there haven't been many (any?) viable examples to come out of that period that would help today's local (and modern) entrepreneurs. 

Given that 221 is long gone, and that newer, focused venture capital like mbloom and Energy Excelerator and even Blue Startups are real, active investors in Hawaii startups, it's probably time for a change in both focus and leadership for HVCB. Sure, the success of these entities has yet to be proven, but the leaders of these modern vehicles, and their supported entrepreneurs, should be the ones driving Hawaii's VC movement forward.

Plus, the model for a viable tech startup has changed immensely over the past few years, and entities like accelerators have popped-up to match the needs of today's entrepreneurs. Hawaii needs current expertise in the VC realm as much as we need current expertise in other areas of tech, startups, and entrepreneurism.

I disagree, however, with @Frank on the need for "hundreds of millions of dollars of investment capital." That's incredibly unrealistic given the current size and success rate of our startup ecosystem. Hawaii needs some success proof points (e.g. significant traction, follow-on funding, hiring, etc.) with investments in the hundreds-of-thousands-of-dollars level first. Until we can point to more than one or two successes, the combined $40M+ from mbloom and EE and Blue Startups is more than enough to support the small number of viable, promising, realistic entrepreneurs that we have.

As @Dan and everyone else seems to mention, the money is available in Hawaii if a viable opportunity appears. Since the money's not flowing, that can only mean one thing...

Comment by Daniel Leuck on February 24, 2014 at 9:59am

@Frank Perhaps it would be useful to narrow the discussion. A capital efficient web startup looking for seed funding (say, <$1.5MM) can absolutely get funding in Hawaii. I've been through the process several times personally, and I've seen dozens of others take a swing (some connected, some didn't), so I know a little about the landscape. If you are an energy play, which I assume is your focus, and you require large amounts of capital for projects, that is obviously much harder. As I'm sure you know, in Hawaii, that often means some combination of public and private money. ONR's commitment of $30MM last year was certainly significant, but obviously more will be required.

One of the challenges with 221 was that it tried to group software startups, films and energy companies in the same bucket. These entities are all important and worthy, but their capital requirements and the metrics needed to measure successful deployment of that capital are quite different.

Comment by Frank Bachinsky on February 24, 2014 at 9:22am

While the new funds and activity is a nice start, it pales in comparison to broader investment activity during 221.

Hawaii faces the significant issue of geographic isolation. Most Silicon Valley and New York investors don't like to finance companies outside of close proximity to their zip code never mind a 5 hour flight away.

It is important for Hawaii to revitalize an economic ecosystem beyond the currently narrowly focused venture funds. Immobative developers need access to deep capital resources that are locally based. Arguments about mainland based venture and private equity filling the current gap is naive. It isn't happening and won't.

Hawaii needs to make hundreds of millions of dollars of investment capital available to allow entrepreneurs to "paddle their own canoes" in Hawaii. Even with its flaws, 221 provided that mechanism. Right now, financing a capital intensive business in Hawaii is next to impossible and we are seeing a number of companies being forced to the Mainland just to have access to any meaningful capital pools.

Comment by Daniel Leuck on February 23, 2014 at 7:22pm

The Maui fund you mentioned (mbloom) is $10MM. The Energy Accelerator just got $30MM from ONR to fund early stage startups that "solve energy challenges". There are several other (admittedly small by CA standards) Honolulu based funds and angel activity is starting to pick up. I wouldn't have said this four years ago during the post 221 nuclear winter (note: this isn't mean to be commentary on Act 221 - just a statement about the investment environment during the years following), but these days, for an state with a population of 1.3MM people, there seems to be decent amount of capital availability. I realize as a start-up entrepreneur it doesn't always feel that way, and for some types of companies, depending on sector, stage and capital requirements, CA investors will likely always be the best bet.

Comment by Frank Bachinsky on February 23, 2014 at 11:41am

IMO there is no real venture capital in Hawaii. The Maui based fund is a good start but it is a drop in a bucket compared to what is needed. Time to rework 221 and create jobs.

Comment by Daniel Leuck on February 4, 2014 at 12:40am

John: Actually that was Honolulu Coders at UH.

Ah - That's right. I'm happy one of us has decent memory :-)

John: The one weird thing about HVCA is that over the last few years the events appeared to become more general economic / business focused (e.g, Send Your Kid To China, The Affordable Care Act, Housing in Hawaii).

I really like HVCA and ThinkTech, including the people leading those organizations, but I also wish they would do more tech events. Perhaps they are trying to best serve an evolving demographic within their organizations.

Comment by John on February 3, 2014 at 6:15pm

Btw, the one weird thing about HVCA is that over the last few years the events appeared to become more general economic / business focused (e.g, Send Your Kid To China, The Affordable Care Act, Housing in Hawaii). All interesting topics but more relevant / appropriate to regular corporations that startups/entrepreneurs.

Comment by John on February 3, 2014 at 6:07pm

Actually that was Honolulu Coders at UH.

Comment by Daniel Leuck on February 3, 2014 at 5:13pm

I think it will depend on how its transitioned. One thing Bill is very good at is recognizing interesting local people, projects and companies in the tech space and putting them together. I met some very good friends at HVCA events.

In fact, isn't that how we met? I have a terrible memory for such things.