Byron Clayton watched as the flood waters took over Baton Rouge, Louisiana.
"First we got the rain and with nowhere to go and the water kept rising even after the rain stopped," says Clayton, president and CEO of Research Park Corp., a nonprofit that assists Louisiana entrepreneurs. "One place is fine and 100 yards down the street there is complete flooding ... I've been amazed at how quickly everyone has come to the aid of others."
A year and a half ago Clayton moved from Cleveland to oversee RPC, an umbrella organization that operates Louisiana Technology Park, a 45,000-square foot facility that houses more than two dozen startups; NexusLA, which focuses on regional collaboration, access to capital and technology workforce diversity; and Innovation Catalyst, a nonprofit that provides capital and services to Louisiana tech companies.
One of the biggest challenges is getting access to investors. "We have investment opportunities, high-potential companies looking for funding. But we are a small state," says Clayton, noting that Louisiana's 4.6 million population is roughly twice of Houston. "Getting access to the capital we need is a top priority."
It's a similar discovery that Mike Eckert, the former president and CEO of The Weather Channel, made when he moved to New Orleans three years ago to be closer to his two grandsons.
"There wasn't a formal angel investing infrastructure and there's no doubt there's an entrepreneurial explosion occurring here," says Eckert, chairman of the NO/LA Angel Network and member of public policy committee for the Angel Capital Association, a national organization that oversees more than 200 angel groups and accredited platforms in North America.
Since Eckert founded the NO/LA Angel Network in 2014, the group of investors has grown from 40 to 132 and made 14 investments in seven Louisiana-based startups totaling $3.7 million. Although the sizes of the investing rounds have varied from $50,000 to more than $1 million, Eckert says the mean average has been approximately $600,000 per investment.
About 70 miles connects Baton Rouge and New Orleans via the Interstate 10 corridor. In the wake of the flooding in Baton Rouge and the 11 years in post-Katrina New Orleans, many serial entrepreneurs and investors have an opportunity to help build the region.
"Every day it gets better. You still have houses here in New Orleans that haven't been touched since Katrina," says Renee Pastor, senior vice president for investments for Raymond James and Associates. "We've had this influx of 30-something professionals, some who were doing volunteer work after Katrina, fell in love with the city and stayed."
Consider Louisiana's angel investor tax credit. Known as AITC, accredited investors who invest in businesses certified by the Louisiana Economic Development as Louisiana Entrepreneurial Businesses can earn a 25.2 percent tax credit on investments up to $720,000 per business per year and $1.44 million per business over the life of the program.
"A lot of people underestimate how much activity is going on Louisiana," says Mark Graffagnini, founder and president of Graffagnini Law Corp., and NO/LA Angel Network's member service chairman.
Look at the region's core competencies. While energy and petroleum have always been big drivers, that also includes sectors such as biotech, energy, health care, hospitality, agriculture, technology and chemical companies.
"Louisiana is a large player in the pipeline, liquefied natural gas and transportation space," says Wade Ragas, a former University of New Orleans professor who now works as a real estate consultant and appraiser. He says "oil and natural gas prices have dropped by over 60 percent since mid-2014 and now may represent a buying opportunity."
Pastor points to master limited partnerships, where a certain percentage of revenue is given to the shareholder and can be held within an exchange-traded fund or mutual fund. Look at a company's history, yields and evaluate comparable midstream companies -- the kind that work with the transportation of oil and gas -- to fellow competitors, she says.
"MLPs aren't supposed to fluctuate with price of gas, but I'm here to tell there is a direct price correlations and they got slammed just like oil prices got slammed when they started dropping in 2014," Pastor says. "Analysts feel like they are seeing the bottom."
There's a big focus on water management. The Water Institute of the Gulf is a nonprofit research institute that focuses on Louisiana's disappearing coastline and couples with state-wide and international water management projects.
Additionally, shipping, logistics and transportation based companies are a large factor since a significant percentage of the goods leaving America go through New Orleans via the Mississippi River.
Many experts also point to the rise in health care investment opportunities with the building of the Veteran Affairs hospital and University Medical Center in New Orleans as well as LSU's Pennington Biomedical Research Center.
Look at tech startups. NO/LA Angel Network investments have included companies such as CyberReef, which focuses on security and connection for virtual private networks; MobileQubes cell phone charging kiosks; Bioceptive, which makes IUD devices; and SmartPak, which designs packaging for the beverage industry.
Other tech companies experts highlighted in the Silicon Bayou include AxoSim Technologies, a New Orleans startup researching its "nerve-on-a-chip" to test drugs instead of animals; Baton Rouge-based MasteryPrep, an online resource center that helps students prepare for the ACT and Kickboard, a software company for educators.
Sherif Ebrahim, president and CEO of Strategic Management Group and managing partner of SMG Capital, two private equity and health care firms in Louisiana, suggests startups like Zlien, a cloud-based platform for liens waivers; and Lucid, a software company focused on big data. "These are things that aren't sexy, but have the potential to be big money makers," Ebrahim says.
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