Louisiana spawns groundbreaking research with creative financial incentives

Why have bioscience innovators chosen Louisiana to advance groundbreaking software that decodes viruses as they spread, invest tens of millions of dollars in radiopharmaceutical centers, and create organ-on-a-chip technology that accelerates drug development?

Some might credit the state’s warm and welcoming culture. Pragmatists point to another type of welcome: Louisiana Economic Development’s leading-edge biosciences incentive package, centered around a research and development tax credit. The credit, established in 2003, covers up to 30 percent of qualified expenses, such as wages, supplies and contract research costs.

Proponents say the R&D incentive helps convince homegrown life sciences firms to remain in-state, offering startups a way to raise capital before generating revenue while encouraging out-of-state firms to relocate.

“We have such a brilliant population. So, I think one of the things we can do is work to retain some of that brilliance, and Louisiana Economic Development is working to support that,” said Trivia Frazier, founder and CEO of Obatala Sciences in New Orleans. “There is an R&D tax credit that we’re able to take advantage of and that has largely been piloted by LED’s efforts and that has really helped us in times of need.”

The self-described “biotech toolkit firm” is pioneering fat-on-a-chip technology that mimics human tissue, allowing drug development to shift from a heavy reliance on animal testing, a model that is both expensive and inefficient.

Louisiana has a number of additional programs that can benefit life sciences companies, especially startups, including:

The Angel Investor Tax Credit: Designed to encourage accredited investors to back early-stage, small wealth-creating Louisiana businesses seeking startup and expansion capital. The program provides a 25 percent tax credit on investments in LED-certified Louisiana Entrepreneurial Businesses.

The State Small Business Credit Initiative: Launched in 2023, the program will make up to $113 million of federal support available to small business owners via private equity funds and financial institutions around the state. The initiative covers five equity investment and credit support programs: collateral support to help participants secure small business loans; loan guaranties of up to $1.5 million; microloans; seed capital; and venture capital.

The System for Integrated Growth: Providing small businesses with the information they need to grow and succeed. Participating firms receive accelerated technical assistance that can help firms get a handle on financial management; learn how to recruit, retain and develop talented employees; and explore new markets and create prospect lists for those markets.

The Small and Emerging Business Development Program: Providing the managerial and technical assistance training needed to grow and sustain a small business. The program provides developmental assistance, including entrepreneurial training, accounting, business planning, marketing and legal assistance.

Small Business Innovation Retention Fund: Offering annual funding of up to $1,105,000 to support innovators in the state who are leveraging federal grants to grow their businesses. Funding is divided into three categories: up to $500,000 for Phase I SBIR or STTR grant recipients, up to $500,000 for Phase II SBIR or STTR grant recipients, and up to $105,000 for technical support and administration.

Small Business Innovation Recruitment Fund: Recruiting out-of-state Phase 2 SBIR/STTR grant recipients to establish their operations in Louisiana. Eligible companies can receive grants of up to $100,000. To qualify, applicants must have received Phase II SBIR or STTR grant funding within the two years before applying and must provide documentation of sales, revenue, and commercial products or services.

CEO Roundtables: Bringing together 15 to 18 key decision-makers from Louisiana firms for 10 meetings over the course of a year. The sessions allow executives to discuss business practices and management strategies with peers who have dealt with or are dealing with similar challenges.

The federal Small Business Innovation Research and Small Business Technology Transfer programs encourage small businesses to engage in research/research and development. The programs offer grants to help small businesses explore their technological potential and commercialization possibilities. The programs include Phase I awards of up to $295,924, to establish the feasibility and commercial potential of the proposed products; and Phase II awards of up to $1.97 million to continue the R&D efforts from Phase I.

“The state of Louisiana supports Small Business innovative research through really good tax incentives and credits,” BioInfoExperts founder and CEO Susanna Lamers said. “All my friends who have businesses in California are very jealous of us…That’s how the state is supporting us. It’s really exciting.”

For more information on Louisiana’s incentive programs, click here.

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