Accelerator’s New Venture Fund Is Helping Ag-Based Companies Expand

In early 2018, KoHana Hawaiian Agricole Rum, a small distiller in Kunia, joined with Mana Up in the business accelerator’s first cohort of 10 young Hawaii-based companies seeking help scaling up their businesses.

Less than four years later, KoHana and Mana Up are teaming up again in the accelerator’s newest major project, Mana Up Capital: a $6.3 million venture fund aimed at Hawaii-based companies seeking money to help them grow.

Mana Up Capital’s investment, in the range of $100,000 to $600,000, will allow the rum company to produce 70,000 to 80,000 cases a year in 2022, up from 10,000 this year, said KoHana’s co-founder Jason Brand.

But to Brand, working with Mana Up is about more than the cash. It’s also about being part of something bigger — an organization working to grow and diversify Hawaii’s economy by building businesses that share Hawaii’s culture.

“We like Mana Up’s message in the community,” Brand says. “We want to be part of that.”

Although Mana Up has built its reputation as a business accelerator and showcase for Hawaii companies, it has always envisioned providing funding for companies as well, co-founders Meli James and Brittany Heyd said in an interview. In fact, James, who launched a successful wine app in San Francisco before returning home to Hawaii, is also president of the Hawaii Venture Capital Association. Heyd, a lawyer and accountant, had worked with 1776, a business incubator in Washington, D.C., that also operates a fund, 1776 Ventures.

But they both knew that starting a fund would take time, so they got started first with the business accelerator, which helps the companies find ways to grow and deal with the challenges that come with growth, like sourcing, manufacturing and shipping.

In the short time since Mana Up started, it has helped 63 companies. According to a report Mana Up released in September, these companies generated $43.4 million in 2020, compared with $36 million in 2019. In addition, $18.5 million of that revenue came from outside of Hawaii, thanks in part to the companies’ ability to quickly shift to e-commerce during the pandemic. In addition to value-added food products, Mana Up supports companies making apparel, home furnishings and health and beauty products.

Mana Up’s quick success doesn’t surprise people who know its founders.

“Keep in mind that Meli has lots of experience,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization. “This is not her first time around the block.”

For their part, James and Heyd say their research and experience showed Hawaii brands have a competitive advantage simply because people around the world have an affinity for the islands. With that in mind, Mana Up chooses to work with companies deeply connected to Hawaii: 100% are headquartered here, 88% manufacture in Hawaii and 48% are Native Hawaiian-owned. In addition, 60% source local raw ingredients, in line with Mana Up’s mission to support Hawaii agriculture.

“The unfair advantage is a global awareness and love of Hawaii,” she said.

At the same time, James says, it was hardly a sure thing that merely providing some training and mentoring could make young Hawaii brands suddenly thrive.

“We had no idea if this was going to work,” she said.

Some Hawaii Brands Cannot Simply Leave

With the accelerator working, the venture fund was the next step. The fund’s first two investments are KoHana and Big Island Coffee Roasters, both of which are based on historic Hawaii cash crops.

James and Heyd declined to say what companies Mana Up Capital might invest in next, but a press release accompanying the announcement of the fund said it will “primarily invest in companies who have gone through the Mana Up accelerator.”

Mana Up Capital has raised money from public and private institutional investors as well as individuals. It’s looking to do 15 investments over the next three years.

For KoHana, the investment means it can buy a slew of equipment, including presses used to extract the juice from sugar cane stalks. KoHana now has more than 300 acres of land in Kunia and Waialua where it grows heirloom varieties of sugar cane descended from canoe plants brought by the Polynesian voyagers who settled Hawaii, Brand said. KoHana also has 40 acres where it is growing cacao used for something it calls Kokolekai, a rum flavored with raw honey and cacao.

All of this means KoHana is in Hawaii to stay, Brand says. Some Hawaii brands, like Kona Brewing Co., found that it made more economic sense to make beer on the mainland for distribution there, rather than shipping empty bottles to Hawaii, making beer here, then shipping full bottles back to the mainland. It simply would make no sense to distill KoHana on the mainland, Brand said.

“One hundred percent of our ingredients are grown in Hawaii,” Brand said. “So we truly are a locally grown company.”

What’s next for Mana Up will likely depend on what new needs arise for the accelerator and its companies. A showcase event for Mana Up companies once planned as an in-person event in November to kick off the holiday shopping season will now be held virtually, live-streamed and broadcast in Hawaii and San Diego. Last year’s showcase had an audience of 198,000.

And James and Heyd say they are working through some challenges. Setting up shop in Japan has proven harder than expected, for instance. And as Mana Up’s companies have grown, some are finding it hard to recruit new workers — a problem Mana Up hopes to help them solve.

In the meantime, people like UH’s Bonham commend Mana Up for focusing on businesses that are uniquely Hawaiian – that really can’t be done anywhere else – then putting in place the pieces, including capital, needed to help the companies grow. But, he said, building a major consumer goods industry in Hawaii won’t happen in just a few years.

“It does sort of demonstrate what we’ve been talking about for a while,” he said, “which is that it takes time.”

“Hawaii’s Changing Economy” is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

“Hawaii Grown” is funded in part by grants from the Ulupono Fund at the Hawaii Community Foundation, the Marisla Fund at the Hawaii Community Foundation, and the Frost Family Foundation.