How Many Start-ups in Paradise?

Nov 2, 2018

Credit Edmund Garman / CC BY 2.0 / Flickr

Entrepreneurship is a growing part of Hawaii’s economy. The world of start-ups is still relatively small in the islands, but over the past eight years, they’ve attracted nearly a quarter of a billion dollars of investment.

A new report from Hawaii-based Startup Capital Ventures has put a dollar figure on the amount of venture capital invested in Hawaii over the past eight years. It’s $247 million. The investments were made across 203 deals with 128 different companies based in the Islands.

Startup Venture Capital’s analysis was commissioned by the Hawaii Strategic Development Corporation, a state agency established in 1990 to foster investment in Hawaii tech companies. HSDC was able to grant SVC access to the venture capital and private equity database, PitchBook, for the investment data.

The number of deals made per year, or deal flow, has steadily increased from seven to 40 by 2018. Most of this investment, just over 95 percent, has been made in very young companies in their early stages. Often these were tech start-ups still in the incubator or accelerator stage.

What’s missing from Hawaii’s venture capital scene is the next level of investment to grow these businesses as they mature. The report’s authors note that at this next level we would see individual investments of $20 million or more.

There was pronounced change in the pattern of private investment in Hawaii start-ups. After 2015, when the state approved its medical marijuana dispensary system, 37 percent of investments in Hawaii’s health care sector went to entrepreneurs entering that new industry.