Hawaii’s tech scene is either full of inexperienced wannabes living off of state money or a team of hard-working entrepreneurs building something great. The view may depend on whether you’re looking from the outside in or the inside out.

One of the biggest startup events to ever hit Hawaii, MaiTai Maui Tech Night, is happening May 13 at Maui Tropical Plantation. It features a startup pitch competition, and organizers expect “an elite group of Silicon Valley investors and executives” to be in attendance. It’s sponsored by a who’s who of Hawaii’s startup scene, including Mbloom, the Hawaii Strategic Development Corporation, Sultan Ventures,  University of Hawaii PACE and the Hawaii Business and Entrepreneurs Acceleration Mentors.

The logo for one of the biggest startup events ever in Hawaii.

MaiTai Maui Tech Night should be seen as another sure sign of the progress Hawaii’s tech sector has made in just a few years, and there’s been progress aplenty. In fact, of the five companies pitching at the event, most already have users, market share, and revenue, all of which are relatively new experiences for most Hawaii startups.

Five years ago, here’s roughly what Hawaii’s startup ecosystem looked like:  The Box Jelly, Hawaii Angels, talk of a future Startup Weekend, a few inexperienced “entrepreneurs” with startup ideas, and some hand-wringing over Act 221, the state’s tax credit for the high-tech and entertainment industries.

Today, here’s what Hawaii’s startup ecosystem looks like:

Accelerators: Blue Startups, XLR8UH, Global Virtual Studio Transmedia

• Legitimate Startups: Dozens, from FlyWire’s cameras to Hobnob’s mobile invitations to MorphOptics low-cost lenses

• Funds/Investors:  Energy Excelerator, Mbloom, Startup Capital Ventures, Upside Fund, Ulupono Initiative and more

• Coworking:  The Box Jelly, ProtoHub, ROC

• Education: DevLeague

• Makerspaces: HiCapacity, Oahu Makerspace, Hawaii Fashion Incubator, Maui Makers, Hawaii Techworks, Kauai Makers Club

• Events: Startup weekends on Maui and Oahu, pitch competitions constantly (some with pupus), MaiTai Maui Tech Night, and more

So, given the progress our tiny, tech industry-lacking state has made over the past five years, why are many of the most vocal community members still so down on Hawaii’s chances?

Mbloom is Back

To start at the nexus of why many are “down,” I talked last week with Arben Kryeziu, managing partner of Mbloom, to get an update on progress since the fund’s now infamous “our first investment was in ourselves” fracas from last year.

Arben comes across as candid and honest, and while he’s always selling his dream, he’s quick to admit his faults. He’s also baffled as to why there are so many naysayers in our startup scene.

“It’s very important to me to create opportunities for Hawaii’s entrepreneurs to meet and network with these people from Silicon Valley,” said Arben, answering my questions on why Mbloom is putting so much effort into the MaiTai Maui Tech Night. “MaiTai has shown so much improvement over the past few years. Last year, we had people from Intel Capital and the CEO of Dropbox. This year, we expect the same caliber, and we have people from Google and Facebook coming, so it’s just a great opportunity to have them here and accessible.”

Arben Kryeziu, managing partner of Mbloom

Arben Kryeziu, managing partner of Mbloom, points to the progress made in Hawaii’s high-tech industry.

Mbloom

“Here and accessible” is an incredible bonus for any local entrepreneur, especially when it comes to well-experienced and flush-with-cash venture capitalists.

“If you know how to network, there’s a lot of opportunity (at MaiTai),” Arben said. “The companies pitching have revenue, have traction. They just need to network, find the right partners, and scale their startups.”

Arben, for his part at Mbloom, apparently knows how to network and find opportunities. While he’s admittedly not the best at letting the public know what’s happening with his fund’s investments, he did say that it has many that are on the cusp of being announced or are caught up in negotiations and can’t be talked about, including its $1 million contribution to a $4 million total investment (the rest being from mainland investors, apparently) in a local stealth-mode startup. And, according to Arben, there’s also a pending “partnernship” with a prominent Silicon Valley entity.

And the Winner Gets …

Recent comments on Facebook from Hawaii developers and experienced startup founders (who asked not to be mentioned) pointed out that winners of Maui Tech Night’s pitch competition get almost nothing but exposure. In what feels like nothing will ever be good enough, commenters say that the lack of a committed investment for the winner ultimately equates to Mbloom’s lack of faith in Hawaii startups.

Although some here are striving to make us the next Silicon Valley, many pitch events in that region come with investment for the winners. A conference just last week run by 500 Startups’ new $10 million DistroFund (same size as Mbloom) invested $100,000 in the winner of its pitch contest. No questions, just, “You win, you get $100,000.”

Darius “Bubs” Monsef, a native of the Big Island and a repeat startup founder and CEO whose last company raised $3.6 million before being acquired by the publicly traded Autodesk, Inc., is one of the more vocal critics. Having spent many years building his company on the mainland, Bubs moved back to the Big Island with his wife to raise his two kids, but remains active in venture capital and startups.

“What seems very odd to me is that (Maui Tech Night) is a pitch contest with no real reward for the effort the founders would put in preparing for and pitching.” — Darius “Bubs” Monsef

“When Mbloom announced their first two investments were in their own companies, the community got out their pitch forks and formed a mob,” Bubs began in an email to me. “There was enough negative press and growing pressure to address the community concerns that a town hall was organized for the Mbloom founders to talk to the community. But now, a year later, myself and others are starting to wonder … Where’s Mbloom? Shouldn’t our local fund that’s taking a possible $200k a year in management fees be more visible in our community? Shouldn’t they be at every Startup Weekend? Hackathon? Etc.? If they’re focused on investing in the community why aren’t they helping the community grow?”

Even though Mbloom is sponsoring and managing Maui Tech Night, it should be doing more, Bubs said.

“What seems very odd to me is that (Maui Tech Night) is a pitch contest with no real reward for the effort the founders would put in preparing for and pitching,” Bubs said. “Pitch events can be really rewarding for founders, but only when they provide huge exposure to potential customers and press, ala Launch or Disrupt, or when there is real money up for grabs.”

Arben did admit that communication isn’t his greatest asset, and that Mbloom needs to do a better job making everyone aware of where it is and what it’s doing. To do just that, Arben mentioned that he’s opening an Oahu office, hiring a communications manager, and retaining a public relations firm, all with his own money, he claims, not Mbloom’s.

Some Glasses are Half-Full

Karl Fooks, president of HSDC, is obviously bullish on Hawaii’s startup scene. He’s used roughly $20 million in government funds to pull in an additional $30 million in private matching funds, and he’s been active in the local community as it grew from next to nothing to what it is today.

“I’m trying to do three things,” Karl told me over coffee. “First, energize the entrepreneurs, and this includes people like Arben and Henk Rogers, to get them to put their own money and efforts to work for Hawaii. Second, use their credibility and networks to catalyze private investors to put money into Hawaii. We didn’t give any of these funds or accelerators’ money until they raised matching funds. They raised that money themselves. No one else was doing it, and the state can’t do it. Third, we want to activate the community to realize and take advantage of the opportunities available, like startup weekends and VC Summits and XLR8UH and Maui Tech Night.”

“It might take another 10 years to get Hawaii where it needs to be, and we’re here to see it through. Three years ago it was a joke. But now we have top people flying in just to attend this one event.” — Arben Kryeziu, managing partner of Mbloom

Both Karl and Arben can’t talk fast enough to get out all of the great opportunities available in Hawaii and how mainland investors are shocked to see how far we’ve come in the past few years. For Karl, why that’s not recognized leads to visible frustration.

“People from outside of Hawaii always comment to me how things have changed so much in the last three or four years,” Karl said. “The opportunities are there, and there are a lot of them, but we can’t hold everyone’s hand. They’re the entrepreneurs. They need to grab these opportunities.”

Others, like Bubs, continue to look at Hawaii’s progress through the lens of Silicon Valley experience and success and see something totally different. While much, much more is happening than just a few years ago, they still see a general lack of experience, success or post-seed investments.

Yes, mainland investors who come here once a year to judge a pitch competition or attend an event see that more is happening, but, critics seem to be asking: So what? Are they investing any money? Are they seeing higher potential, higher quality entrepreneurs, more investable startups, or are they just seeing more activity? Networking and pitch events are great, but not if investors aren’t writing checks. And if they’re not writing checks to Hawaii’s startups, then you have to wonder why.

As we talked through the troubles Mbloom has faced in the community, Arben said that he takes a longer-term view.

“It’s a learning process,” said Arben. “But it’s perseverance that makes it work. We made some mistakes, but we’re still trying. We didn’t give up. It might take another 10 years to get Hawaii where it needs to be, and we’re here to see it through. Three years ago it was a joke. But now we have top people flying in just to attend this one event.”

Perseverance is what entrepreneurship is all about. If you quit, you lose. For Hawaii’s tech sector, it’s good to see that Arben and Karl and others aren’t quitting. If they had, would there even be a Maui Tech Night?

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About the Author

  • Jason Rushin
    Jason Rushin has nearly 20 years of experience in software marketing, consulting, and engineering, and currently works as a marketing consultant for high tech clients, both locally and in Silicon Valley. Prior to relocating to Hawaii in 2010, he led marketing at several Silicon Valley software startups. Once in Hawaii, he launched and subsequently sold his own startup, and has been an active supporter of Hawaii’s small-but-growing startup ecosystem. Jason holds a BS in Mechanical Engineering from University of Pittsburgh at Johnstown and an MBA from Carnegie Mellon University.