By Justin Obletz, Chief Financial Officer at Advantage Capital. This post originally appeared in CityBusiness.
For DXC Technology, the Virginia-based global information technology company with $25 billion in revenues, choosing New Orleans over 30 competitors for a Digital Transformation Center was no accident. That came on the heels of decisions by Texas-based Accruent, the French mobile video game giant Gameloft, and GE Digital, a cloud-storage and systems company, to move here. All this, US News & World Report advises, means more than 20,000 new jobs.
Once famous more for Mardi Gras, voodoo, and gumbo, New Orleans has attracted over 45 high-tech startup companies. Recognizing opportunity, Tulane University’s A.B. Freeman School of Business has announced a new entrepreneurial program to provide master’s degrees to professionals in the hospitality industry. The University of New Orleans has entered into an agreement with GE Digital that educates apprentices then places them into
good GE Digital jobs.
Tax incentives are proving decisive, dispelling doubts about their value and propelling New Orleans to $7 billion in new investment. No surprise such success has caused Inc.com to label the City that Care Forgot a surge city, while, in praising its drive to become the next great tech city, The Verge calls New Orleans “Silicon Bayou.”
What kind of incentives are working? Louisiana offers a 25% tax credit on qualified payroll to companies that move all or some operations to the state. The New Markets Tax Credit and Gulf Opportunity (GO) Zone programs have injected dynamic incentives for entrepreneurs who are flocking to the city. Nor does growth rely on new companies. Local tech companies like TurboSquid, Lucid, and Zlien, founded before Katrina, are driving economic development. TurboSquid began as a small tech startup. Today, it’s a leader in the 3D marketplace, offering 3D models for professionals and collectors, and leading the way in the development of virtual reality. One of its cutting-edge developments can literally place you in a 360-degree environment on Mars or the summit of Mt. Everest, enable you to walk inside a Van Gogh painting or descend to the depths of the oceans to greet a whale. If that sounds mind-boggling, it is. French Truck Coffee, a local coffee roaster, has doubled its revenue every year since its launch six years ago, expanding to locations in Baton Rouge and Memphis. Fortune calculates a 996% five-year growth rate.
The thing about incentives is that in igniting growth and inspiring entrepreneurs, cities like New Orleans become a magnet for top-tier new talent that fire up new phases of expansion. Gameloft received 17,000 applications for 15 jobs. Greater New Orleans, Inc. CEO Michael Hecht points to a robust culture that capitalizes on the city’s ability to provide a unique, enriching lifestyle and affordable cost of living – while specifically focusing on fostering entrepreneurs. An 85,000 square foot state-of-the-art I.P. building, an entrepreneurial hub, echoes the venues that have turned hip cities like Seattle, Austin, and San Francisco into mini-innovation districts that create synergy and new ideas among its occupants.
Nonprofits play a vital role in this dynamic process. In a state that supports tax incentives that create real, high-paying, permanent jobs, organizations like Propeller have emerged to help entrepreneurs grow their nonprofits and small businesses tackle social and environmental disparities in New Orleans. Working out of a 10,000 square foot coworking space, its success has garnered attention in Forbes, Wired, Entrepreneur Magazine and The New York Times. Propeller sponsored a competition that awards $10,000 in total startup funding ideas. The Idea Village is rooted in the belief that entrepreneurship powers the transformation of communities. Its programs that educate entrepreneurs on how to accelerate growth, test ideas, and turn a fuzzy idea into a repeatable and scalable business, and its unique workshops that inspire networks, have supported over 750 new entrepreneurs.
What’s striking about the synergy that tax incentives, a robust, can-do attitude within the business community, and the emergence of a sustained culture of innovation is that New Orleans has achieved success despite a lack of Fortune 500 companies. More important, the city and state have focused on inspiring, fostering, and supporting new businesses. They have avoided the trap of selling themselves to wealthy multi-national giants like Amazon and Apple.
The greatness of any city lies in the spirit, dedication, and energy of its people. New Orleans has long earned a reputation for that. Katrina showed a strong, separate dimension: resilience. Founded 300 years ago, New Orleans has always stood proudly apart for its cosmopolitan outlook and traditions. As we look to our 27th year in business here, we pay homage to the city’s unwavering spirit. We’re excited to help shape its future. Here’s to the Crescent City’s next 100 years.
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This article was written by New Orleans-based investment firm Advantage Capital, a company that began as a startup and has become a national leader in using tax incentive approaches that deliver bottom-line results in the form of successful companies and high-paying, permanent jobs – the foundation of any prosperous economy.
This article was prepared for informational purposes and does not constitute an advertisement concerning investment advisory services or an offer to sell or a solicitation of an offer to purchase any security or investment product, including any interest in any fund or investment vehicle managed directly or indirectly by Advantage Capital.