HI Growth Initiative
Growing the innovation economy is critical to Hawaii as it is an economic sector that provides a clear pathway to generate highly skilled, well-compensated jobs to employ Hawaii’s STEM-educated graduates.
The Hawaii innovation sector needs equity capital to grow and achieve critical mass. HSDC implemented the HI Growth Initiative to attract private investment to Hawaii’s innovation economy. Community events, like Startup Weekends and pitch events, were supported to encourage entrepreneurial activity. Four accelerator programs were established to support entrepreneurial development, a university commercialization fund was implemented and 6 private sector investment funds were formed to create access to equity financing for Hawaii startups.
Starting in 2012 through 2016, The HI Growth Initiative established Hawaii as a viable place build competitive startups. A 2016 report by the University of Hawaii’s Economic Research Organization, Evolution of the HI Growth Initiative, found 65 companies have been funded as a result of the HI Growth Initiative. The average capital investment from the HI Growth Initiative is $160,000 per company, representing a cumulative investment at the end of 2015 of $10.5 million. Companies on average have gone on to attract an additional $2 million in private funding for a total of $136 million: over 12X leverage on the state’s investment.
The 2017 Kauffman Index of Growth Entrepreneurship State Trends ranked the State of Hawaii second among the 25 smaller states. Hawaii scored well in the categories of Rate of Startup Growth and Share of Scaleups. Hawaii achieved an increase in 9 places in its ranking, the largest increase in rankings.
The HI Growth Initiative focuses on three program areas: entrepreneurial ecosystem development, accelerators and investments. The comprehensive approach to supporting high growth entrepreneurship was an important factor in achieving the outcomes highlighted by the University of Hawaii and the Kauffman Foundation reports.
The state legislature has chosen not to continue funding the HI Growth Initiative. However, in 2017, the State of Hawaii’s Employees’ Retirement System committed an additional $35 million to its Hawaii Targeted Investment Program recognizing the development of Hawaii’s innovation economy. This investment allocation will be directed to investment funds that will have some part of their portfolio companies based in Hawaii.