Small business–food entrepreneurship in Hawaii

Small business–food entrepreneurship–is becoming a substantial business in Hawaiʻi.

The people who produce great Hawaiʻi-made food, those who focus on exceptional high-quality, conscientious sourcing, no-rush principles, and are dedicated to creating artisanal, self-made products, are agents of change within the state. They are some of modern Hawaiʻi’s most influential entrepreneurial leaders, and if trends continue, this industry will continue to burgeon in the coming years. Recent research confirming that Hawaiʻi’s innovation economy is critical to regional growth and prosperity is optimistic news for the people who live and work in the state and for consumers who seek out unique food products of Hawaiʻi. 

Food entrepreneurship jobs offer one pathway for local workers to become highly skilled and well-compensated. In a state where the economy is currently hinged on the military and tourism, the growth of a third sector, research and innovation (including a subsect of food entrepreneurship) has been identified as a community priority. Particularly in the wake of the COVID pandemic, we see now more than ever that this more resilient sector is necessary for Hawaiʻi’s economic stability. 

In order for the “maker community” to thrive, a strong network of shared resources, government support, and overall connectivity is vital. There is still a lot of progress to be made before Hawaiʻi will resemble the established startup locations of the mainland. Yet there is an ecosystem that is beginning this long-term work; growing more robust with the help of local incubator and accelerator programs, co-working and shared production facilities, funding and investors, and education to facilitate youth entrepreneurship. 

Hawaiʻi-based incubator programs (helping entrepreneurs to flesh out business ideas) and accelerator programs (expediting the growth of existing companies, usually including some combination of mentoring, funding, and networking) account for a large chunk of the resources available to those with food ventures. 

Blue Startups is one of the original accelerator programs in Hawaiʻi, founded with the goal of leveraging the state’s strengths to diversify its economy. They do so by giving startup companies resources ranging from product testing to introductions to investors and seed funding. 

Pacific Gateway Center’s Culinary Business Incubator serves 80-90 Honolulu-based food start-up entrepreneurs every month. 

Mana Up is also a Hawaiʻi-based initiative that supports products which elevate authentic Hawaiʻi stories. Their vision is to grow local products to markets worldwide with the resources of a 6-month accelerator program and a venture capital fund. 

Launched in 2009, and with a branch in Hawaiʻi, Elemental Excelerator has created a new non-profit model for funding businesses looking to redesign systems at the root of our climate crisis. They have already invested $48.8M into 130 growth-stage companies and celebrated more than 20 exits (the selling of a company, by the founder or owner, to other investors or firms).

Hawaiʻi Investment Ready, an impact investing non-profit, just launched a new Hawaiʻi Food Systems Accelerator Program, aimed at targeting systems-level challenges and opportunities such as food supply chain vulnerabilities. They are interested in investing in a resilient economy for the state, and also offer workshops based around leveraging Hawaiʻi capital to educate Hawaiʻi-based investors on best practices to amplify impact. 

We at Common Ground offer both an accelerator program which supports small local food and beverage businesses, and CG Foundation, an incubator that aims to further the development of agriculture, arts and education in Hawaiʻi. 

The Maui Food Innovation Center is combining the resources of incubator and accelerator programs as well as a shared production facility. Finding that six of the seven community colleges in Hawaiʻi currently have or are working on offering food manufacturing programs, they saw a need to bring members of the community college and members of the private sector together and launched a Food BIN (Business Incubation Network). The Maui Food Innovation Center also received funding from Hawaiʻi State Legislature to build a state-of-the-art, shared-use commercial test kitchen at Maui’s University of Hawaiʻi campus. 

Another major component of any start-up is, of course, cash. Food ventures are no exception.

Luckily, there are funds and investors geared directly toward bolstering the food innovation economy of Hawaiʻi. The Hawaiʻi Food Producers Fund lends money to value-added food producers within the state through the Kiva lending program. Slow Money Hawaiʻi provides loans to small farmers and food ventures who are addressing food security issues through their sustainable practices. The Ulupono Initiative invests in Hawaiʻi entrepreneurs involved in various sustainable business sectors, including local food production.

Venture capitalists and angel funds also offer a potential avenue of cash influx. Builders VC seeks to invest in the “next hot thing” and help entrepreneurs who bring important companies into existence. They keep four offices in the US and Canada, one being in Oʻahu’s Chinatown. Surf Club Ventures is also Oʻahu-based, investing in companies with the insight to create a future where technology, communities, and nature work better together. Angel investment networks connect private investors with companies, like food entrepreneurs, that make an impression on them. 

Cash injection is important. But without having all players connected, without the necessary scale, or the availability of sufficient funds, and without policy support, the innovation ecosystem won’t have the capacity to operate at its full potential. 

A strong food innovation economy in Hawaiʻi will require long-term investment within the community. For this reason, a major component should be the implementation of youth entrepreneurship programs across the state.

Hawaiʻi’s STEM-educated (science, technology, engineering, and math) youth will be the next wave of artisans, innovators, concoctors, and makers. The Maui Economic Development Board’s STEMworks program works with students K-12 throughout the state to become proficient in STEM by way of a variety of programs. 

The Hawaiʻi Agricultural Foundation’s Young Entrepreneurs program empowers middle and high school students to develop businesses that utilize locally-sourced agricultural products. Hands-on experience developing business plans, selling at local festivals and markets, and earning revenue (that is funneled back to the respective middle or high school programs) just might inspire Hawaiʻi’s youth to become entrepreneurs and remain entrepreneurs for the future of the state’s food innovation economy.

Because getting today’s skilled and educated youth to stay in Hawaiʻi, to launch start-ups here and build strong and competitive companies will be the key to the long-term stability of Hawaiʻi’s innovation sector and our economy as a whole. Major local stakeholders agree that this is a long-term endeavor and that the infrastructure is young but continues to grow. As it stands now, talent is often leaving the islands and there are not enough venture capitalists or angel investors to incentivize entrepreneurs–the paradigm needs to shift. 

    In the past, Hawaiʻi offered tax breaks to startups (Act 221) but the laws were not renewed due to concerns about whether they had any effect. Back in 2016, Governor Ige proposed consistent state investment in private equity and risk capital, aimed at working alongside accelerators and venture funds, but this has yet to come to fruition. 

    There is great opportunity to create a third, resilient sector of Hawaiʻi’s economy: research and innovation, with a subsect of food entrepreneurship. But there are still major caveats to navigate. With the understanding that perhaps the future of Hawaiʻi’s economic stability hangs perilously in the balance, the time is now to strengthen the startup ecosystem, connect the players, and change some of our state’s policies to truly support our entrepreneurs.