Aug. 30, 2018, may go down as one of the most significant days in the history of Lafayette’s economy.
It started with news that LAGCOE was leaving for New Orleans, and it ended with a pitch competition that signified the launch of Accelerate South’s cohort of healthtech startups.
LAGCOE is the Louisiana Gulf Coast Oil Exposition, a biennial tradeshow founded in Lafayette in 1955 that can draw 17,000 attendees from around the world.
Accelerate South is an accelerator established by a group of leading health care and business organizations in Lafayette to help startups grow their companies and get investment.
So what makes this random confluence of events so economically significant?
It’s as much about what they represent as the amount of actual dollars at stake.
For example, while the Accelerate South launch event may have been a pitch competition held on UL’s campus with only $2,500 up for grabs, the 10 startups were seeking tens of millions in investment while projecting hundreds of millions of dollars in revenue that could presumably generate billions of dollars in wealth over time.
Imagine that they were all successful, that they raised all their investment capital from Lafayette, and that they all decided to headquarter in Lafayette. We could be talking about adding billions of dollars to our GDP and thousands of jobs.
Of course, the odds of this happening with all 10 of these particular companies in Lafayette is small. For starters, only one of these startups is currently headquartered in Lafayette. The odds of any startup succeeding can be low, especially when many of the ones pitching still had years of work remaining before they get FDA approval and could actually start selling their services. And there were at least a few the investor judges seemed skeptical of at best, adding to the unlikeliness they’ll all get funded locally.
Even still, as a symbol this event was immensely significant. Take those investor judges for example. Four of the five were representatives of some of Lafayette’s largest organizations all sharing the stage with the common interest of investing in next generation health startups. Those organizations were:
- Lafayette General Health: Lafayette’s only community-owned not-for-profit health system that delivers more than $800 million worth of health care to Acadiana annually
- LHC Group: Now the second largest provider of home health services in the country, headquartered in Lafayette, which has a market cap of about $3 billion and a billion dollars a year in revenue
- Viemed: A leading provider of home respiratory care and services, which has a market cap of hundreds of millions and revenue of tens of millions a year
- Acadian Ambulance: One of the largest ambulance companies in the U.S., providing service to millions of people across Louisiana, Mississippi and Texas
That means represented on this stage was billions of dollars in revenue hearing pitches for millions of dollars in investment that has the potential to produce hundreds of millions of dollars of more revenue.
That makes this event an incredibly powerful symbol of the potential that health technology startups offer for our area to recover our $10 billion in lost GDP.
But this wasn’t even the biggest news of that day, as the loss of LAGCOE is significant both in terms of the money directly at stake as well as what this development represents as a symbol for our energy economy.
In terms of money directly lost, Lafayette Convention and Visitors Commission Executive Director Ben Berthelot shared a rough estimate of $2.5 million.
On the one hand that’s only .4 percent of the $604 million our accommodation and food service industries generate.
But at the same time, this $2.5 million gets added to the $20 million this part of our economy lost from 2016 to 2017, according to recently released metropolitan GDP statistics from the Bureau of Economic Analysis.
Additionally, I think that the estimate of $2.5 million could be a fraction of the actual impact. At its height, LAGCOE attracted 17,000 attendees. If we assume that 5,000 of them were from out of town and were staying here for five nights that’s 25,000 hotel nights and 25,000 days to eat and drink Lafayette. If we assume $100 per hotel night and $100 per day for breakfast, lunch, dinner, drinks, and shmoozing, that equals $5 million. And any of these variables could actually be higher than these estimates.
But the potential economic impact runs deeper than just what attendees spent on lodging, food and drink while they’re here for the conference. How many of these attendees ended up falling in love with Lafayette and came back as tourists with their families? Or what about those who brought their families with them to LAGCOE? How many people first discovered Lafayette through LAGCOE and then found employment here or perhaps even started a company? And even though LAGCOE is just moving down the road, how much of an impact will that have on Lafayette companies being able to leverage LAGCOE to sell their wares and services when they no longer have home field advantage?
So just off the financials of this event alone, it’s as if millions of dollars walked out of Lafayette and moved to New Orleans.
Then we get to analyzing the impact of LAGCOE as a symbol of the continued plight of Lafayette’s energy economy.
While the reason LAGCOE gave for moving was not having enough space to grow, there seems little doubt that this event wouldn’t be moving if Lafayette were still booming as the oil and gas hub for Louisiana.
If Lafayette hadn’t lost many of its oil and gas production companies, if some of our major service companies hadn’t gotten so unstable, if we wouldn’t have so many smaller service companies that are hurting, if we hadn’t of seen thousands of jobs get destroyed, and if this industry as a whole hadn’t shifted away from drilling on the Shelf in the Gulf, LAGCOE would most likely still be happening in Lafayette next year.
But the reality is that all of those things did happen, and our energy economy lost almost $5 billion between 2012 and 2016. I’m happy to report that according to those BEA GDP statistics, between 2016 and 2017 we regained almost $300 million, but there seems to be limited hope that this sector of our economy will ever recover all of the ground that was lost.
So as a symbol of the flux our economy’s in, it’s hard to imagine a more significant day than Aug. 30, 2018.
The question now becomes, how will we respond to these developments? Will we continue to sit back and assume our economy will right itself? Will we mourn what was lost and lose hope for the future? Or will these events catalyze our community to take action to recognize the hole we’re in and commit ourselves to doing the hard work and taking the risks that are required to fully recover our prosperity?
The answer is up to us.