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Bill Spencer
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HOW MANY CRISES DOES IT TAKE?
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Started this discussion. Last reply by Auhea Jun. 17, 2008.
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- Are you a resident of Hawaii?
- Yes
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- I have led the Hawaii Venture Capital Association since 1999 and am an advocate of diversifying Hawaii's economy with a strong tech sector.
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Aloha, Rox
1) this is the program we had at the April 25, 2008 HVCA Luncheon with Della Au Belatti, Neal Milner, Burt Lum, Ryan Ozawa and Peter Kay - http://www.hvca.org/signinTV.aspx?name=HVCA~April~2008~Luncheon~Meeting~-~Can~a~Constitutional~Convention~set~the~stage~for~Hawaii`s~Economic~Diversification&video=HVCAConconSite.wmv
2) Thisis the video of the discussion at the Law School - http://www.hvca.org/signinTV.aspx?name=ConCon~discussion~at~the~William~S.~Richardson~School~of~Law&video=WSRConCon.wmv
HVCA - Hawaii Venture Capital Association, one of Hawaii's oldest non-profit economic development organizations (founded in 1988) devoted to entrepreneurship, capital formation and diversifying Hawaii's economy with a robust technology and innovation sector.
For more info, http://www.hvca.org
HOW MANY CRISES DOES IT TAKE?
by Bill Spencer 4/9/2008
With the closure of Aloha Airlines, ATA Weyerhauser and Molokai ranch, Hawaii’s tourism industry has suffered another major blow. The loss of 2,000 jobs and half a million airline seats to Hawaii is not fatal, but surely it is yet another sign that Hawaii tourism is not immune to the global stresses caused by high oil prices. It is not as bad as the impact of the first Gulf War or 9/11, but it is significant to our tourism based economy. Editorial writers in both papers are calling on leaders to revisit ways to diversify the economy. As usual, such concerns seem to be forgotten when tourism is strong and the economy is booming. It takes a crisis to remind leaders that something needs to be done. It is like a bad intersection where once in a while there will be a terrible crash and neighbors will start crying out for a stop light. How many economic fatalities in the tourism industry must Hawaii endure before we sustain an effort to buttress our teetering economy with a strong tech sector?
There is evidence of organic growth in technology employment. According to a recent survey conducted by the American Electronics Association, Hawaii ranked fourth nationwide with 6.3 percent growth in tech-industry jobs between 2005 and 2006. Hawaii ranked in the top five states with the fastest growth rate in tech wages since 2001. The average wage for a high-tech worker in Hawaii in 2006 was at $68,363 compared to $35,908 in the non-tech sector. Unfortunately, tech is still a small percent of the economy with Hawaii ranking 46 in tech employment overall with only 30 out of every 1,000 employees employed by technology firms. There are almost 15,000 tech jobs in 1,400 firms statewide with a total payroll of $1 billion.
The Hawaii Venture Capital Association Innovation survey with 106 companies (8% of all tech companies) reporting supplies us with some interesting information. Almost half of the companies reporting are not seeking investment capital from outside sources. The remainder have raised almost $75 million of venture capital in 2006 through 2007 and are presently seeking more than $60 million in additional financing for mostly later stage rounds. These companies employ almost 600 tech workers with a monthly payroll of just over $1 million. Almost 300 new hires are planned within the next 12 months. Among these companies, 48% of their revenue comes from Hawaii sources and 61% of their annual budgets are spent in Hawaii. Sixty percent of employees in these firms are from Hawaii. These 106 companies report 84 patents granted, 80 provisional patents and 32 patent applications in process. Of all companies reporting, 21% are in the dual use sector and have obtained $18.5 million in federal grants and contracts.
There clearly is progress and growth in the tech sector and tech entrepreneurs are forging ahead, but we are fast approaching another dangerous intersection. Companies seeking to expand, commercialize intellectual property and execute business plans need more venture capital than is presently available in Hawaii. If our own survey of 106 companies is any indication, Hawaii is woefully lacking the kind of venture capital it will take to sustain and grow technology entrepreneurship. Act 221/215 is headed toward sunset by the end of 2010 and there are still only a handful of professional venture capital firms struggling to get Hawaii institutions to invest with them. Are we going to wait for more fatalities at the diversification intersection of our economy, or are we going to get serious and start investing in our growing tech sector before it’s too late?