In a nondescript white building in Manoa, a seven-person team of physicists and engineers at Nalu Scientific is working to help answer the mind-bending question of why the universe exists.

It’s heady work for a scrappy startup located a stone’s throw from the Manoa stream, Long’s Drugs and Kay’s Crackseed shop in Manoa Marketplace.

And while Nalu’s president and chief executive Isar Mostafanezhad is keenly focused on designing electronics that can be used to help plumb the origins of energy and matter, there’s also a more mundane question at the back of his mind: Who’s going to be Nalu’s landlord in July?

The University of Hawaii is scheduled to take over the Manoa Innovation Center from the Hawaii Technology Development Corporation in July. Stewart Yerton/Civil Beat

That’s when the University of Hawaii is scheduled to take over the Manoa Innovation Center from the state Hawaii Technology Development Corp. The move, which seems certain to happen, will mark the end of the HTDC’s 25-year run at the helm of the 45,000-square-foot business incubator, which is home to dozens of startups, including Nalu.

While UH has promised it won’t kick out any existing tenants, entrepreneurs like Mostafanezhad wonder whether UH will give startups the same support that HTDC has given them.

And for HTDC, the shake-up poses an existential threat: The organization has been using rental income to cover its operating expenses, says Robbie Melton, HTDC’s executive director and chief executive. And without cash to operate, it’s not clear what will happen to HTDC, which is still trying to develop a new incubator in Kakaako.

“There was always a plan to move down there,” Melton says. “But now they’re forcing the issue.”

If lawmakers have their way, HTDC won’t be falling apart. House Bill 583 would appropriate an unspecified sum of money to the HTDC to cover administrative costs while HTDC develops a new incubator similar to the Manoa Innovation Center.

Meanwhile, Senate Bill 48 would fund HTDC and ask the state’s Department of Accounting and General Services, which manages state buildings, to find a new home for the HTDC and the Manoa Innovation Center’s tenants.

“I’m confident we’ll get our funding,” Melton said. “As long as we’re still in business – that’s what I’m happy about.”

Nalu Sceintific, a startup located in the Manoa Innovation Center, is creating processing chips vital to physics experiments conducted with the KEK High Energy Accelerator, pictured here, in Tsukuba, Japan. Belle II Collaboration

And that’s good news for companies like Nalu, for which HTDC is more than a landlord, says Mostafanezhad, the Nalu CEO.

After earning his doctorate in electrical engineering from UH, Mostafanezhad was working as a post-doctoral fellow under Gary Varner, a physics professor familiar with the work being done at the KEK High Energy Accelerator, in Tsukuba, Japan.

One of the largest machines ever built, the KEK accelerator is designed to force head-on collisions of subatomic particles traveling at nearly the speed of light to study what happens afterward.

The KEK accelerator is on the leading edge of experimental physics; it helped confirm theories that won the 2008 Nobel Prize in physics for the Japanese physicists Makoto Kobayashi and Toshihide Maskawa.

UH has a number of scientists involved with KEK, including Tom Browder, who since 2013 has served as the spokesman for a 25-country, 700-member team conducting an experiment at KEK called Belle II.

The problem Mostefanezhad’s helping solve is essentially how to record the particle collisions: no small feat, given that the particles are unimaginably small – billions could fit on the head of a pin, he says — and travel at almost 183,000 miles per second.

Isar Mostafanezhad, chief executive of Nalu Scientific, said the High Technology Development Corp. has been instrumental in getting the seven-person company off the ground. Stewart Yerton/Civil Beat

He set up Nalu at the Manoa Innovation Center to develop microchips that would process data from sensors set up close to the point of the collision, inside and around the accelerator’s giant cylindrical chamber. The center gave Nalu a location close to UH, with amenties like high-speed and access to meeting rooms, plus a community of entrepreneurs. The price was way below market price for office space, Mostefanezhad says.

As important as the office space, Mostefanezhad says, is the support he’s gotten from HTDC. He says he happened to be in a meeting with HTDC where he heard about a federal grant, operated by the U.S. Department of Energy’s Office of Science, called the Small Business Innovation Research program. He won a series of grants totaling about $1.6 million. HTDC, which is attached to the Department of Business Economic Development and Tourism, provided an additional $150,000 in matching funds.

The money has allowed Nalu to hire staff like Ben Rotter, a physicist who earned his doctorate at UH, and Dean Uehara, an engineer who moved back home to Hawaii from the East Coast, where he had been designing microchips for companies like Westinghouse. All of this happened in less than two years.

“This would have been delayed substantially if it hadn’t been for that meeting” with HTDC, Mostefanezhad says.

The result is a company producing electrical engineering work that Belle II’s Browder calls “unique and special.”

“They’re providing a critical component to making the Belle II experiment work,” he said.

Vassilis Syrmos.UH VP research Innovation outside Bachman. 23 may 2017
Vassilis Syrmos, UH’s vice president of research innovation, says he sees synergies between the current tenants of the Manoa Innovation Center and technology being developed at the university. Cory Lum/Civil Beat/2017

Whether UH will be as helpful as HTDC has been remains to be seen.

Technology industry boosters have long envisioned UH spinning off intellectual property from the university into startups. And last session, the Legislature gave UH more ability to do just that. It passed a bill, which Gov. David Ige signed into law, that lets university faculty, staff and students create startups using capital from a new fund into which UH can invest money.

Vassilis Syrmos, UH’s vice president for research and innovation, said UH doesn’t want to displace any tenants and will let HTDC stay at the center rent free, although HTDC will have to pay a maintenance fee. Syrmos also said UH will try to provide services to tenants, potentially letting them use lab space on campus, for instance.

“We think there are very good synergies between the existing tenants” and companies UH is trying to spin off, he said.

UH Building Repair Backlog Worries Tenant

Still, current tenants have questioned the need for change.

Diane Jordan, the owner and chief executive of Resurgo, a cyber-security startup, echoed Mostafanezhad, saying that HTDC was not just a landlord but also a mentoring and networking organization.

“I’m not sure if UH can do this or not,” said Jordan, who employs 16 people. “All I know is HTDC is this unified, well-defined, well-running entity, and their sole purpose in life is to help us.”

Russell Cheng, the founder of Devleague, which provides immersion training courses for computer programmers, was more blunt in comparing HTDC to UH. In testimony, Cheng pointed to a reported repair and maintenance backlog of $500 million across the UH system’s 10 campuses statewide.

“MIC will soon be one of hundreds of facilities in UH’s backlog of facilities,” he wrote.

His concern: Manoa Innovation Center will, as he put it, get “lost in the UH repair shuffle.”

None of this is to say the HTDC is perfect. The organization has landed federal and private money for what it’s calling the “Entrepreneurs Sandbox,” but hasn’t gotten the project off the ground. And it’s still trying to develop a full-fledged incubator in Kakaako to replace the center.

Meanwhile, plans to develop a $55 million training center for first responders like police and firefighters on Oahu has raised questions about whether that project is consistent with HTDC’s mission as a high technology development organization.

Still, the Manoa Innovation Center is clearly within HTDC’s mission, and bills to fund HTDC have gotten support from groups like DBEDT, the Hawaii Food Industry Association and the Hawaii Chamber of Commerce.

That’s good news for tech entrepreneurs like Mostafanezhad.

“If you’re a small innovation company in Hawaii, nobody else really wants to help you,” he said. “If these programs are cut, we’ll have to look for somebody else’s hand to hold for a while.”

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