Hawaii Lawmakers Pass Two Bills to Encourage VC Investment

To encourage investment in high tech companies, the Hawaii Senate recently passed Senate Bill 1695, authorizing $120 million for the State Private Investment Fund (SPIF) and Senate Bill 1696 to allow fiduciaries to make equity investments.

Under the SPIF program, the state could use transferable tax credits in order to guarantee commercial bank loans to professional venture capital (VC) firms. These firms, in turn, would use the loans to invest in local high-tech companies.

SPIF was created by the Legislature in 2004, although no funds were directed to it at the time. The fund is designed to function as a financing tool to provide a consistent source of capital to meet the demands of Hawaii's high tech industries, according to the Senate Majority Caucus.

Following the lead of other states, the House Economic Development & Business Concerns committee also passed SB 1696 to encourage institutional investors, such as the Employees' Retirement System, to invest a small portion of assets in local high tech companies. Under the bill, fiduciaries could invest up to 2.5 percent of their funds, but no more than 10 percent of their capital.

Both bills are available through the Hawaii Legislature at: http://www.capitol.hawaii.gov/