Hawaii Venture Capital Report

Startup Capital Ventures, Hawaii’s leading venture capital fund, recently released their report, “Venture Capital in Hawaii 2010 to 2018“.

The report states that part of the reason for Hawai‘i jumping 9 places and ranking second in the Kauffman Foundation’s 2017 Growth Entrepreneurship Index, is the growth and development of an active venture capital (“VC”) market in Hawai‘i, a critical ingredient of a startup ecosystem. The report highlights activity in Hawai‘i’s venture capital market, specifically four trends, each signaling growth and opportunity for venture capitalists and startups:

  1. Deal flow growth. The number of total deals generated by Hawai‘i-based startups is increasing.
  2. HI Growth Initiative a Stimulus for the Software Industry. The HI Growth Initiative drove significant activity in the Information Technology sector through the support of startup development vehicles like accelerators and incubators. This is reflected in the trends during and after the HI Growth Initiative period; from 2012 and 2016, 64 software-related deals were completed, translating to 48% of total deals transacted in the same period. Early stage software startups were the most commonly funded group during HI Growth. This means we are likely to see an increase in in demand for later stage deals as these startups grow and scale.
  3. VC Investment Stability. Adjusting for the spikes in 2012 and 2016 in VC deployed, the amount of VC deployed remains at a steady baseline of around $20.88M per year.
  4. Key Externalities Create High Impact in the Innovation Ecosystem. Advances that reduced the cost and complexity of starting technology businesses coupled with efforts from public institutions like the Hawai‘i Strategic Development Corporation and entrepreneurship entities like GVS Transmedia Accelerator, Blue Startups, Elemental Accelerator, and XLR8UH, a University of Hawai‘i and Sultan Ventures program, helped to cultivate a healthy early stage innovation ecosystem.