Investing in Hawai'i high-tech increases
By John Duchemin
Advertiser Staff Writer
High-technology investing activity in Hawai'i appears to be increasing significantly as three more local technology companies confirmed receiving investments at the end of 2002.
Hoana Medical, Hawaii Biotech and Hoku Scientific together raised more than $2.9 million in investments at the end of December, officials for the companies said yesterday.
So far, a half-dozen Hawai'i companies have confirmed receiving investments in late December — most of it from wealthy local and mainland individual investors taking advantage of the high-tech tax incentive known as Act 221.
Local technology industry observers say December was probably the most prolific fund-raising month to date — and a sign that years of effort to germinate a Hawai'i technology industry and set up an adequate funding base are starting to bear fruit.
After putting millions of dollars into local companies in the waning hours of 2001 — the first year of Act 221 — investors were even more active this year in consummating year-end deals that will allow tax credits of up to 100 percent of the amount invested, said Robert Robinson, a professor at the University of Hawai'i College of Business Administration, who runs a networking group for wealthy Hawai'i investors.
"December was a feeding frenzy," Robinson said. "Act 221 has clearly been a huge help."
Robinson said he's aware of several other year-end investments that have not yet been announced. Investors have made Act 221-related investments in December in order to claim the associated credits when the new year begins, and thus generate an instant return.
The state estimates at least $20 million was invested in Hawai'i technology companies in 2002, up from about $16 million in 2001.
The latest companies to confirm funding represent three separate high-tech industries.
Hoana Medical, a maker of medical monitoring devices, raised $1.6 million in convertible debt from local and Mainland individual investors including Silicon Valley Bank chairman John Dean, Schuler Homes president James Schuler and Lawrence Johnson, former chairman of Bank of Hawaii, according to Hoana president Patrick Sullivan.
Hoana, an eight-employee company with a research lab in Kaka'ako, will use the money to refine and test its first product: a sensor-filled pad designed to fit under hospital bed sheets and constantly monitor patients' breathing, heart rate, movement, blood pressure and other vital signs.
The company is a spin-out of government-financed research firm Oceanit, which developed an earlier version of the technology for military use.
Hawaii Biotech, an 'Aiea-based research firm, raised $840,000 from private investors at year's end, company president David Watumull said. The money will help Hawaii Biotech hire new scientists and continue its research in areas including prospective vaccines for dengue fever and West Nile disease.
The company, which has about 30 employees, also received a grant worth several hundred thousand dollars to conduct preliminary trials on its potential West Nile vaccine, Watumull said.
Hoku Scientific raised $500,000 in late December from private investors including Johnson, the former Bank of Hawaii president, said Dustin Shindo, co-founder and president of Hoku.
Hoku is developing a membrane for use in fuel cells, and has received financial backing from Hawaiian Electric Industries.
The new money will help finance the hiring of several new employees and the purchase of new lab equipment, Shindo said. Hoku, which has about a dozen employees, recently moved to a research lab in Kalihi from offices in the Manoa Innovation Center.
All three companies had raised millions of dollars in 2001 and earlier in 2002.
Earlier this week, three other companies confirmed receiving investor money. Landmark Technologies confirmed raising $1.5 million from the state of Hawai'i and several private investors. The wireless Internet equipment maker will use the money to set up its headquarters and main research lab in Hawai'i.
Big Island aquaculture company Kona Bay Marine Resources raised $380,000, and Kailua firm AssistGuide, which provides Internet services to long-term care providers, raised $470,000.
Reach John Duchemin at jduchemin@honoluluadvertiser.com or 525-8062.
