Venture capital fund managers with a track record of investing in Hawai'i plan to raise a combined $128 million in the next two years, according to a report released yesterday by the Hawaii Institute for Public Affairs.

That should help fill an anticipated demand for $147 million in venture capital among Hawai'i companies during the next three years ($49 million annually). The demand for venture capital, or private equity investments, is expected to rise because maturing local firms will need larger amounts of capital, according to HIPA's report titled "Venture Capital: An Assessment of Market Opportunities."

The study suggests there is a relatively small gap between forecasted venture capital demand and availability in Hawai'i.

"It is a favorable signal," said John Chock, president of the Hawaii Strategic Development Corp., which oversees $16 million in public money invested in venture capital funds that invest locally. "We're seeing real development in the tech investment opportunities here — stronger companies and more capital available to help those companies grow.

The report was based on survey responses, press clippings and annual report information for a sample of 63 companies.

Fund managers interviewed for the study said various factors are contributing to the growth of venture capital investments in Hawai'i including: