Venture capital financing (also known as venture capital funding or VC funding) is a form of financing for new or early-stage companies with high growth potential. Venture capital financing is offered by venture capital firms, which are professional investment firms that receive investment money from state pension funds, university endowment funds, and wealthy individuals. Venture capital firms seek multiple returns on their initial investment in a startup company. When evaluating companies to invest in, venture capital firms consider many factors, including (1) the strength of the management team; (2) the size of the market the company is in (total addressable market or TAM); (3) whether the company has proven there is demand in the market for its product or service (product-market fit); and (4) how easy or difficult it will be for other companies to compete with the company seeking venture capital financing.

In Hawaii, venture capital financing is not governed by a specific set of state statutes but is subject to general state laws on securities, business entities, and contracts, as well as federal securities laws. Hawaii-based startups seeking venture capital must comply with the Hawaii Uniform Securities Act, which regulates the offer and sale of securities in the state. Additionally, these companies must adhere to federal regulations, such as those enforced by the Securities and Exchange Commission (SEC), including regulations on accredited investors and the registration of securities offerings. Venture capital firms in Hawaii will evaluate potential investments based on the strength of the management team, market size, product-market fit, and competitive landscape, among other factors. These firms typically seek equity in the companies they invest in, with the expectation of a significant return on investment. It is advisable for startups to consult with an attorney to ensure compliance with all relevant laws and to structure deals that protect their interests.