Posted on: Friday, February 27, 2004
Tech firm lured out of state
By Sean Hao
Advertiser Staff Writer
Firetide Inc., a wireless computer networking company that benefited from Act 221 state tax credits, is moving its headquarters from Honolulu to Los Gatos, Calif., where it has had more success raising capital.
The company employs about 26 people, about half of whom remain in Honolulu, said Firetide spokeswoman Barbara Cardillo.
The loss does not bode well for Hawai'i's efforts to build a technology industry and reduce the state's economic dependency on tourism. Despite millions of dollars made available through the Act 221 tax credits, the state's high-tech industry remains more a dream than a reality.
"The local investors who invested in the company had visions for a Hawai'i-based company, and they feel somewhat betrayed by the decision," said Firetide co-founder Tareq Hoque, who resigned as chief executive in October when the company said it would increase its presence in California.
Firetide moved to California to grow and attract more investment capital. Among its large investors is California-based Menlo Ventures, which pumped $10 million into the company, Hoque said.
Hoque said Menlo was a factor in the decision ultimately to diminish its company's Hawai'i presence. Whether that jeopardizes Firetide's eligibility for Act 221 tax credits depends on how much research or income the company derives from its remaining Hawai'i operations.
David Watumull, president and chief executive of Hawaii Biotech, which also has received Act 221 credits, said Firetide's move is not a condemnation of Act 221, but a sign of how difficult it is for some local companies to attract expansion capital.
"It's a perfect example of how well 221 can help start a company in Hawai'i, but it shows how important it is to fill in the need for the next round of financing," Watumull said.
He and other industry leaders are urging lawmakers to adopt a new tax creditibacked fund to spur venture capital investment statewide. Hawaii Biotech, which is seeking expansion capital, could stand to benefit from such a program.
Firetide's move coincides with the announcement that Bo Larsson of California has become the company's new chief executive. Larsson most recently was chief executive for Fremont, Calif.-based Emuzed, a developer of multimedia products and technologies. He has more than 20 years of experience in engineering, marketing and international sales in the personal computer, mobile and telecommunications markets.
"It just makes sense to have the headquarters in the same place the CEO is," Cardillo said.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
