After graduating from Universidad Politécnica de Puerto Rico with a degree in computer engineering, Alberto Lugo knew he wanted to be an entrepreneur, and he knew that he wanted to build his company on the island. A college internship in Puerto Rico with Microsoft gave him the spark of an idea, and after working for six months in IT for a bank, also located on the island, he saw his opportunity. There was a large gap between the capabilities of the software solutions that businesses could buy and the unique requirements that they had for automating key business processes.
Lugo founded Internet Vision Development (INVID) to fill this gap, customizing off-the-shelf software for customers. Business was good, and the company grew, mostly serving businesses located in Puerto Rico. But when Hurricane Maria, a devastating category-5 storm, struck the island in September 2017, Lugo’s business came to a standstill. He continued to pay his 25 staff members, but even if INVID had been able to marshal the resources it needed to resume coding, the company’s customers were on pause.
Lugo knew he had to diversify his customer base. So, he traveled to DC, where he was able to secure contracts with companies that provided software to the U.S. Federal Government. Ultimately, Lugo diversified his business so that roughly 50% of the company’s revenue comes from companies outside of Puerto Rico. But his intent was never to move his business to the continental United States. The advantages of Puerto Rico were just too great.
“I always talk about the Puerto Rico advantage,” Lugo said. “There’s Act 60, which provides investors with a 100% tax exemption from Puerto Rico income taxes on dividends, capital gains, and interest. And as for talent, we have two of the best engineering schools in the United States right here. I have to compete with companies like Lockheed and Accenture to hire graduates.”
But that’s just the beginning. Labor is more cost-effective than it is on the mainland, plus the island is located in the Eastern Time Zone. And both customers and investors that are U.S. citizens can travel there without a passport. Additionally, any intellectual property developed in Puerto Rico is protected by U.S. laws and regulations. It’s a very competitive environment in which to develop products and services for mainland customers.
“The tax advantages are tremendous, our universities turn out top-notch engineers, and we’re protected by U.S. law. Plus, the weather sure beats the mainland in the winter,” Lugo said. “I can’t imagine a better place to do business than Puerto Rico.”
The island has also hardened its infrastructure substantially since 2017. “Most companies now have redundant, resilient power, water, and other infrastructure. These days, if we saw another storm like Maria, I know that INVID would be back up and running within 24 hours,” Lugo said.
And starting a business in Puerto Rico has gotten even easier in the last five years. Today, there are incubators and accelerators like Parallel 18 and Grupo Guayacan that provide enormous support to young companies that includes cash awards without giving up equity, assistance in validating the company’s solution, mentoring, and connections to potential investors.
INVID is having its best year ever in 2023, and its future looks bright. The company started the year with 50 employees, has since grown to 75, and Lugo expects to be at 100 by December. His diverse customer base includes defense contractors, corporate clients in the banking industry, large software companies, and healthcare organizations.
To learn more about the Puerto Rico advantage, visit InvestPR here.
Business, IT Leadership