Risky Business
But the victory was only a partial one last session, because although the fund was created, the Legislature didn't actually appropriate the tax credits, so proponents will have to lobby again this year for authorization of the credits. Furthermore, instead of backing the $100-million fund that was initially proposed, the Legislature scaled it down to just $36 million. In response to the curve ball, HSDC President John Chock and Department of Business, Economic Development and Tourism Director Ted Liu have begun a national search for a fund manager for SPIF. "The idea of looking for a fund manager now is so that when we go back to the Legislature and ask them to specifically authorize the credits and transfer the credits to HSDC, we can have a professional, qualified fund-of-funds manager sitting there with us before the Legislature to indicate that this program will be professionally managed," says Chock. "We also expect that the fund manager would be able to leverage the public credits with private investment funds - ultimately making more funds available for investment in Hawaii's entrepreneurs." As of early December, the official request for proposals for the fund manager still hadn't gone out. However, California-based Erica Bushner, who gave the keynote address at the annual Wayne Brown Institute venture capital conference in Honolulu last September, has been pegged as the early frontrunner. Chock says Bushner, managing director of GKM Newport Generation Funds, is a "likely candidate," given her "track record and expertise."
Whoever lands the gig has got their work cut out for them. Even within the venture-capital community there's skepticism about the presumed value of the program. After all, the Oklahoma fund-of-funds created in 1993, after which SPIF is closely modeled, hasn't even been around long enough to determine whether its investments will earn enough returns to spare the state from doling out millions in tax credits. And several local sources tell Hawaii Business they're doubtful the tax credits will be authorized at all.
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