Santa Fe high-tech startup Descartes Labs is seeking a $750,000 state loan to make lease payments on its downtown Santa Fe office complex for two years in the wake of the COVID-19 pandemic.
The company, which creates proprietary software used in satellite imaging and analysis, has laid off 12 employees from its local staff of 75 since the novel coronavirus economic shutdown took hold in March.
“Descartes Labs remains in a strong position for growth and our request for a LEDA loan is to assure our cash resources remain available to invest in our product and expanding our team,” the company said in a statement. Officials declined interviews.
The New Mexico Economic Development Department is considering issuing a $750,000 no-interest emergency loan to Descartes Labs through its Local Economic Development Act funds to help maintain jobs and business operations as a result of COVID-19 economic disruptions.
Gov. Michelle Lujan Grisham announced the emergency LEDA loan program March 12 to help maintain jobs and business operations as a result of the health crisis. Eight companies have applied so far, with the largest request coming from Descartes Labs, Economic Development Department spokesman Bruce Krasnow said.
The next highest loan application so far is $304,000 from Vibrant Corp. in Albuquerque, Krasnow said.
The city of Santa Fe is the fiscal agent for the LEDA grants and loans issued in Santa Fe and is responsible for distributing the state funds and assuring requirements are met.
The Descartes Labs application passed unanimously through the city’s Economic Development Advisory Committee last month and will be heard June 15 by the city Finance Committee before appearing June 24 for a public hearing at a City Council meeting.
“It’s basically business as usual,” said Fabian Trujillo of the city Economic Development Department. “We’re trying to expedite this as fast as we possibly can.”
The loan agreement stipulates Descartes Labs must have at least 56 employees in Santa Fe who are paid an average annual salary of $135,000. The company now has 63 employees, Trujillo said.
A May 20 economic impact report regarding Descartes Labs forecasts $426 million in taxable sales from the company over the next 10 years. Descartes Labs has two years to pay back the loan.
“We will be better positioned for continued growth during the uncertain environment that COVID-19 has presented to so many businesses,” Descartes Labs said in a statement. “We are thankful to the city of Santa Fe and the State of New Mexico for supporting business through the use of LEDA loans and we look forward to sharing our progress and vision for the future with the City Council.”
State and city government have bet on Descartes Labs on several occasions, seeing the promise of a growing tech company in Santa Fe. Since starting in 2015 with a handful of Los Alamos National Laboratory scientists, Descartes Labs had grown to 75 employees and drawn $60 million from investors, the second-highest amount for a Santa Fe company behind Meow Wolf, according to PitchBook, which tracks venture investments.
Descartes Labs renovated and moved into the 20,000-square-foot former Firestone Building at West Alameda and North Guadalupe streets in 2018 with the support of a $700,000 Local Economic Development Act grant plus $100,000 from the city. The agreement called on Descartes Labs to make $4.2 million in capital investments over 10 years, and so far the company has spent $3.1 million, according to a city document regarding the loan.
These grants are based on employee growth at Descartes Labs. The city has paid out $540,000 as Descartes Labs reached 70 employees, Trujillo said.
The grants are set up with a $260,000 bonus if Descartes reaches 90 employees in Santa Fe by January 2022. With the economic uncertainty from the virus, the agreement was amended to give Descartes Labs until 2024 to reach 90 employees, Trujillo said.
The state Economic Development Department five times between August 2015 and August 2018 awarded the company a combined $397,248 in Job Training Incentive Program reimbursements to train 14 employees who would be paid an average of $57.91 per hour, Krasnow said.
Descartes Labs in January had 115 total employees with the others in San Francisco; New York; Denver; and Fairbanks, Alaska.
Descartes Labs creates technology for satellite imagery analysis. As former CEO Mark Johnson put it, the “secret sauce of Descartes” is using the imagery to forecast future crop growth and, now, track consumer and supply chain activities during the uncertain COVID-19 era.