When Volta Inc. went public late last month, it was an important milestone not only for the manufacturer of charging stations for electric vehicles, but also for Hawaii. That’s because Volta was born here, funded by Hawaii investors: Hawaii Angels and Blue Startups.
Although Volta relocated its headquarters to San Francisco years ago, the success shows that Hawaii can produce innovative, successful companies.
This idea is particularly relevant now as the public and policy makers see the risks of relying on tourism for much of Hawaii’s economic well-being. The Covid-19 pandemic toppled an economy that was scorching hot from some measures and fueled by record numbers of tourists. Hawaii’s unemployment rate was around 2% and was among the lowest in the country.
Then came Covid-19, Governor David Ige effectively suspended trips to Hawaii, and Aloha state went from first to worst with an unemployment rate of 22% as the crisis escalated in April 2020. The economic pain is clear, says Chenoa Farnsworth, managing partner at Blue Startups and managing director of Hawaii Angels.
“The pain is real, and we’ve felt it in many ways now,” said Farnsworth, who has worked with, coached and funded Hawaiian entrepreneurs for nearly 20 years.
“If we don’t take a bold step now, I don’t know what it takes,” she said. “It should be clear that we cannot continue what we have been doing so far.”
Lisa Kleissner, co-founder and CEO of the Business Accelerator Hawaii Investment Ready, agrees. The Covid-19 crisis has shown that the status quo – an economy in which, according to some estimates, half of the residents are fighting paychecks for paychecks – simply cannot go on.
“We have to do things differently,” she said.
Farnsworth, Kleissner, and others who work with entrepreneurs point out several things Hawaii can do differently to fuel local innovation and economic development. This includes buying locally made products and investing in local small businesses – something that becomes increasingly possible as crowdfunding tools mature.
There is also a need for concerted public policy initiatives that encourage innovation, they said. In the case of Volta, for example, Farnsworth said Hawaii has an aggressive electric vehicle policy that quickly got many electric vehicles on the road and created an environment ripe for a charging company.
“An important lesson to learn is that public policy can drive innovation in these areas,” she said.
Farnsworth believes that the University of Hawaii can play a bigger role by developing centers of excellence in industries like renewable energy and tourism. This could help develop more of the intellectual property that often serves as the foundation for high growth potential companies like Volta, which is now valued at more than $ 1 billion, she said.
Tourism managers can also play a role, Farnsworth said, by vowing to support and mentor technology startups in the tourism industry. Some entrepreneurs would surely settle or stay in Hawaii, she said.
“That would be groundbreaking for us,” she said. “That’s what people would come for.”
“A door to innovation”
Tiffany Huynh, Honolulus Elemental Excelerator’s external affairs director, would take Farnsworth’s idea one step further. Rather than just focusing on the University of Hawaii, Huynh said Hawaii should make a concerted effort to establish a national energy laboratory in the state.
Not only would UH benefit from this, but the state’s entire renewable energy and innovation ecosystem, Huynh said. Such a laboratory, she said, could be “a door to innovation”.
The Earthshot from Elemental Excelerator on Vimeo.
But, she said, it will take the community, including business and political leaders, working together to land a federal project that could make a world of difference.
“We really need government support to take the needle one step further on these matters,” she said.
Such a vision may be ambitious, but that’s typical of Elemental, which has emerged as a national leader in growing technology companies with a focus on climate change and sustainability. In just over a decade, Elemental has invested in more than 100 growth companies and financed more than 70 technology projects.
Elemental announced on Wednesday that it has set up a $ 60 million venture fund called Earthshot Ventures to fund companies developing technology to save the planet.
Elemental also launched the Elemental Policy Lab, a new initiative aimed at “driving change at the local, state and federal levels by translating what local entrepreneurs are learning into actionable policy solutions that inspire climate change , Create jobs and promote justice. ”
“Funding is important, but so is politics,” said Huynh. “Politics moves markets”
Build with principles
Whatever economic development policy Hawaii ultimately develops, Kleissner said the focus should be on principles that promote things like social justice. Hawaii Investment Ready does this by supporting and investing in companies dealing with social and environmental issues on the islands.
Kleissner refers to a recent article by the economist Michael Schuman, which outlines ideas for promoting a more resilient community economy after Covid. The principles include local ownership and investment, innovation and social justice.
When asked how ordinary people can invest in small local businesses, Kleissner points to crowdfunding sites that allow people to make small equity stakes in start-ups and initiatives like the Hawaii Food Producers Fund, which enables people to become smallholders Granting small loans.
Supporting locally owned businesses is important so that revenue and profits flow into the Hawaiian economy and not elsewhere.
She referred to a much-cited, sobering study, the ALICE report, which found that more than 40% of Hawaiian residents barely made it through paycheck to paycheck.
“That is the context in which we have to work,” she said.
Growing the Hawaii brand
On the ground floor of the Royal Hawaiian Shopping Center, tucked away in a prime retail space that was once inhabited by Louis Vuitton, Meli James shows that small Hawaiian brands can compete with their neighbors, world-famous brands like Tiffany & Co. and Hermes.
James ‘House of Mana Up sells consumer goods from companies that James’ Incubator Mana Up has cultivated. These include candy bars from Manoa Chocolate, scarves from Lola Pilar Hawaii, and bed linen from Noho Home.
Mana Up’s online business was booming during the pandemic, says James. And Mana Up just announced a venture fund funded by big players like Kamehameha Schools and Hawaii Employees’ Retirement System.
The purpose of all of this is to bring money to Hawaii, Hawaiian businesses and workers, James says, especially money that tourists would otherwise spend on goods from elsewhere. But, says James, Mana Up also shows the culture of Hawaii.
James, who is also president of the Hawaii Venture Capital Association, says the Hawaii brand is hugely valuable, an emerging brand that stands for things like aina, aloha, sustainability, authenticity – things that resonate with consumers.
“It’s an emerging brand,” she says. “It is the spirit of Aloha. It’s about Hawaii, but it’s also bigger than Hawaii. “
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