Economy Hawaii Small Business TechnologyWritten by Dennis Hollier On 17 January 2013
Fixing the Startup Blues

When we think of the problems facing tech start-ups in Hawaii, we tend to focus on the shortage of venture capital, a dilemma highlighted by the untimely demise of Act 221. Hawaii entrepreneurs have done reasonably well raising angel funds (or importuning friends and family,) but finding money to fund the gap between a prototype and a profitable business has always been a challenge here. A related problem for inexperienced entrepreneurs is gaining access to the technical advice and business support systems (including a roof over their head) that are often the sine qua non of business success. Both of these problems are apt to be exacerbated by University of Hawaii plans to take over the building currently occupied by the Manoa Innovation Center, one of the few startup incubators in the state. If UH administrators follow through with their plans, the results could be devastating to Hawaii’s already fragile technology innovation sector.

There is a bright spot, though, in this scenario. Henk Rogers, of Tetris fame, in partnership with a variety of well-respected tech advisers from around the Pacific (including a who’s who list of local tech practitioners,) recently founded Blue Startups, an organization that puts a new twist on the incubator model. Hawaii tech stalwart Chenoa Farnsworth will run the show.

Like other accelerators, Blue Startups offers qualified entrepreneurs a combination of a physical home as well as a suite of services designed to improve the likelihood of success for young businesses. That includes a network of nearly 50 mentors, both local and from tech communities around the Pacific, plus experts to provide legal, marketing, financial and technical advice. Interestingly, the Blue Startups plans go beyond the normal incubator model by also offering seed funding for companies accepted into the program. Most important of all, the Blue Startups model offers all this support in a highly structured format.

  • 2 cohort sessions per year of up to 10 companies per session.
  • 12-week intensive learning program, with weekly sessions on topics ranging building financials to attracting capital.
  • One-on-one assigned mentors based on sector expertise—meeting at least weekly.
  • $20,000 funding for a 6% equity stake in the company.
  • Access to an international mentor network and partner resources.
  • Cohort working space (for up to three people) at the Blue Startups co-working facility.
  • Showcase day: Invite outside investors in for a first look at the companies at the end of the program.
  • Alumni development and continued contact with companies after Showcase Day.

Essentially, Blue Startups is implementing the highly successful model developed by the Global Accelerator Network to Hawaii. (Blue Startups has applied for membership to GAN.) One thing that sets Blue Startups apart – at least from publicly supported accelerators, like the Manoa Innovation Center, is that it’s also an investment tool for Rogers and his partners. Note that Blue Startup funding includes an equity stake in the companies it supports. In this sense, Blue Startup blends features of both incubators and some venture capital groups. That means Henk and his team have a real stake in the success of participants. It probably also means they’ll be more selective than your average accelerator.

So maybe it’s not surprising that the deadline for companies to apply to join the first cohort of Blue Startup entrepreneurs has been extended to January 31. If local companies need any extra incentive to sign up, it’s worth noting that, as a member of GAN (assuming Blue Startups is accepted), cohort companies will be eligible for as much as $100,000 in free support services from companies like Microsoft Azure, SoftLayer and PayPal. So, all your entrepreneurs out there: time to polish up your elevator pitches.

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