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Geoff Daily

App-Rising.com covers the development and adoption of broadband applications, the deployment of and need for broadband networks, and the demands placed on policy to adapt to the revolutionary opportunities made possible by the Internet.

App-Rising.com is written by Geoff Daily, a DC-based technology journalist, broadband activist, marketing consultant, and Internet entrepreneur.

App-Rising.com is supported in part by AT&T;, however all views and opinions expressed herein are solely my own.

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July 28, 2008 10:30 AM

Government Supports Innovative App Development in Louisiana

During my time in Louisiana last week, one of the most eye-opening trends I saw was a series of examples of how proactive government can drive innovation in the development of cutting-edge broadband applications.

The first I learned of came from Chris Schultz, who runs Voodoo Ventures, a startup incubator that helps entrepreneurs go from business plan and concept to prototype and readiness to attract venture capital. At lunch on Friday at Herbsaint in New Orleans, he opened my eyes to an angel investor tax credit in Louisiana. It allows angel investors to write off half of all angel investments over $100,000. So you put $100,000 as an angel investor into a company, you get to write off $50,000.

This idea almost floored me. It just makes so much sense to help stimulate investment by sharing risk. And because of the relatively low minimum of $100,000, I can see this tax credit opening up the possibilities of becoming angel investors to a whole new class of individuals. Of special interest to me is how this tax credit may impact the entrepreneurial atmosphere of Lafayette, where I've been told by multiple sources that there are many well-heeled locals who want to support the development of applications that take advantage of the new LUSFiber network. I think this tax credit is going to be an incredible tool to get money out of banks and into the more explosive economic engine of application development.

The second tax credit I learned about while listening to Chris Stelly, directory of film industry development within the Office of Entertainment Industry Development. While Louisiana has put a lot of effort and attention into attracting Hollywood producers and the like to film in Louisiana, I was excited to learn their efforts aren't limited to content production. One of the tax credits that falls under this larger umbrella is for "digital interactive" projects. While initially designed to attract video game developers, Chris shared that it can also be applied to something like an online financial planning tool, and when I followed up with him he confirmed that potentially any interactive Internet application could qualify.

While there are some restrictions regarding things like where in the life cycle a company or product is and how many jobs a company plans to create in Louisiana, the tax credit that's currently available provides 25% of the money a company puts in to developing the infrastructure of and for new interactive applications. So say it costs you $100,000 to build an app, now you can get $25,000 back. While I don't know if this is a large enough incentive to convince people to invest and companies to start that might not have otherwise, I do believe quite strongly in the likelihood that companies who get these credits will be reinvesting that money back into their businesses, whether it be for further development, marketing and sales support, hiring more people, or whatever.

To date they've only had nine projects qualify for this digital interactive credit compared to more than sixty for film productions and almost forty for film infrastructure, but in chatting with Chris afterwards I learned that supporting the application development community is of keen interest to them and that there may be potential for exploring additional tax credits targeted at this specific market.

The final example I'll share with you today came when I met the wonderful people at Nifty TV, aka Network Foundation Technologies. In chatting with them about their innovative live P2P video technology, which enables live events to be delivered to an infinitely large audience without it costing an infinitely large amount of money to deliver, I learned about an interesting part of their history: they're funded in part by the National Science Foundation (NSF).

Now I'd long thought about the NSF as more purely research-centric than commercial-focused, and to have more interest in traditional sciences than the wide, wild world of the Web. But Nifty has managed to secure multiple Small Business Innovation Research Grants, most recently a Phase II one worth $500,000 in April.

Though this fact surprised me, its possibilities also excite me. It seems to suggest that the NSF has realized the value in supporting those initiatives that are developing new ways to fundamentally improve how the Internet works. While I'd be surprised if we ever saw them invest in a new social network or media sharing site, I'm hopeful that there may be additional opportunities for them to fund the research that's going to be needed to create a better Internet experience for all apps, content producers, and users.

While I often write about the important role government can play in spurring broadband deployment and usage, this trip through the great state of Louisiana also opened my eyes to how impactful government can be in spurring the development of the applications themselves that make broadband networks worthwhile and help users understand why broadband should matter to them.

If anyone reading this has other examples of how positive, proactive government policy can drive the development of broadband applications, please add them as a comment below!

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Comments (2)

Geoff - Great post. Thanks for helping to get the word out about theses incentives. There really is a lot of great opportunity in Louisiana right now. It always feels good for us down here when people take a special interest in our state and you clearly have. I appreciate that. Can't wait until BarCamp Lafayette.

Posted by Chris Schultz on July 28, 2008 12:53 PM

Thanks for the great post on Louisiana. You did your homework but if anyone would like more information on the angel investor tax credit they can visit:
FYI: I don't live in Louisiana, nor am I working with any government agency there.

Posted by Kurt on July 30, 2008 1:20 PM

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