Maui Group Aims to Shake Up Hawaii’s Venture Capital Activity

Money

If you’re an entrepreneur in Hawaii, there aren’t many local options for raising venture capital. Sure, there’s the brand-new-but-yet-to-invest  mbloom technology fund, or the Hawaii Angels, which hasn’t mentioned any news of substance since their 2012 investment in Volta. On the fund side, there’s UPSIDE Fund, which hasn’t posted any news (on the web, at least) since they announced a $100,000 investment nearly 4 years ago, and Startup Capital Ventures, which has deep Hawaii connections but hasn’t mentioned a Hawaii-based investment since 2010 (again, at least according to Google).

Yes, some investments are confidential, but seeing virtually zero public news in the past few years would seem to correlate with close to zero total investment, don’t you think?

5929475379_413be83a77_bAnd yet, while government entities like HSDC and HTDC, consultants like Sultan Ventures and their recent VC Summit event, and Energy Excelerator and Blue Startups are doing their part to elevate, educate, and enhance local entrepreneurs, it’s clear that there’s something blocking the flow of money from locally-directed venture funds and angels to local entrepreneurs, otherwise there would be news of many more deals than we’ve seen.

When asked about this disconnect, many hide behind the “lack of investable opportunities” argument. I’d counter that money sitting unused is money wasted, or that “nothing ventured, nothing gained,” or some other cliche that basically says:  If you have money earmarked for investment in Hawaii and you’re not investing it, you either lack the risk tolerance required to be a venture investor or you’ve failed to recognize that Hawaii is a nascent startup market and that we’re a decade or more away from realizing your idealized view of Hawaii as the next Silicon Valley.

Furthermore, I’d also argue that money invested into Hawaii entrepreneurs that’s then subsequently “lost” does nearly as much good (maybe more) for the current ecosystem than a “successful” exit that benefits a few people who’ve already moved away from Hawaii.

But I digress…

Helping Investors Invest

More money for, and more interest in, Hawaii’s entrepreneurs is always a good thing, which is why it’s interesting to see HiFMP Advisors pop up on Maui.

Started by Virendra Nath and John Kevan, HiFMP is an outgrowth of Nath’s desire to put together a financial exchange for Hawaii’s local, illiquid securities, sort of like a locally-focused SecondMarket, which became famous as Facebook’s early employees traded stock before the company’s IPO. As a precursor to that project, Nath and Kevan joined with  Thelma Alane to create HiFMP.

Alane, Chief Compliance Officer at HiFMP, recently explained their early strategy and gave some insight into what HiFMP aims to accomplish.

“As we learned more about Hawaii’s investment space, we saw that there was room for an investment advisory firm,” Alane explained. “We’re setting out to be a licensed investor advisor representative. We want to help Hawaii businesses raise money and we want to help investors find good, local investments.”

How will HiFMP make it easier for investors to make decisions? By doing all of the vetting and making it easy for investors to compare opportunities and decide where to put their money.

Getting Entrepreneurs to Open Up

One major challenge in working with local entrepreneurs is their strong reluctance to open up about the state of their business. It goes well beyond the typical entrepreneur’s “everything’s great” external attitude and not only forces other entrepreneurs into a kind of “keeping up with the Joneses” fakery, it impedes the overall progress, learning, and growth of the entire Hawaii startup ecosystem.

“In Hawaii, it’s not typical for startups to be open and honest about their success,” Alane continued. “As an advisory firm, we can get companies to open up because they are essentially hiring us to help them get to the next level. If someone is looking for an opportunity and an investment fits, then we can give private, detailed disclosures to the investor.”

It’s a needed concept, and a great step towards more openness and honesty from Hawaii’s entrepreneurs.

As we talked about other local investors, Alane mentioned that they are “hoping to enhance organizations like the Hawaii Angels, not supplant them.” She added that HiFMP’s mission is to combine both new and different ways of approaching local investors while also leveraging the existing methods for raising money in Hawaii.

Just Getting Started

While HiFMP has yet to officially launch any services, they’ve already started building the foundation.

“I honestly don’t know where this will go, but we’re thinking through it in a systematic way,” said Alane. “First, we’re looking for potential investors. Second, we’re seeking out potential opportunities and startups who are looking for investment. And third, we’re looking for people who might want to offer their current equity holdings on a local, private exchange.”

“Most importantly, we want to get feedback, get people involved, and get help with building our system,” Alane continued. “Beyond that, we actually have really big plans. We want to test this idea out in Hawaii and then roll it out to other markets nationally.”

For now, Alane is asking for two things:

  1. Register on their site, which puts you on their mailing list for future updates.
  2. If you’re trying to raise money, let them know.

According to Alane, HiFMP currently has about 6 startup investment opportunities in their hopper.

For more info, check out http://hifmpadvisors.com/