$6M fund will boost startups that arise from UH research

A new $6 million round of venture capital funding will provide a major push in the campaign to develop commercial applications for research being done at the University of Hawaii.

The state-run High Technology Development Corp. will combine $3 million of federal funding with $3 million from the University of Hawaii Foundation to help develop companies based on research and development being done at UH, Karl Fooks, HTDC president, said Tuesday. The fund will be jointly managed by the two entities.

The funding will allow UH to make significant strides in its long-standing effort to better leverage research and development spending and raise its profile in the venture capital world, Fooks said.

“It’s a virtuous circle. There is a new generation of students coming out of school that wants to go to an academic institution that will support their activities and allow them to commercialize them,” he said. “It allows them to take their innovation and use it in the commercial marketplace for the betterment of mankind, which is kind of what they’re in this business for.”

The $6 million will be used to provide seed capital for four to five startup companies a year for a period of five years. The fund will be a second generation of the much smaller Upside Fund launched by the HTDC 18 months ago, which provided capital for three UH research projects.

One of those projects that focused on biomedical research has successfully changed into a private company with the help of $100,000 from the Upside Fund. The company, called Protekai Inc., uses patented protein from jellyfish as a diagnostic tool.

Fooks said the new round of funding will help prospective startups stay afloat long enough to attract the attention of private-sector venture capital funds, including ones represented at the annual Hawaii Venture Capital Summit held Tuesday at the Sheraton Waikiki hotel.

He said the success of the initial Upside Fund was heartening.

“It gives us a tremendous amount of confidence that there is going to be more deal flow. And so we’re willing to increase the size of that fund to really start cultivating something.”

Vibrant venture capital markets have traditionally formed around education centers, he said. Such is the case with the universities near Silicon Valley and Boston.

It also will help keep Hawaii’s brightest minds at home.

“It creates opportunities for our students. It keeps our educated young people here.”