When you think of hot spots for startups, Austin and Silicon Valley typically come to mind. But there’s another city starting to make its mark in the business world: New Orleans. In fact, this past fall, analytics company Lucid based in NOLA sold for about $1.1 billion, making it the city’s first “unicorn.” And construction software platform Levelset developed in town was also acquired for $500 million. So, why is the Big Easy becoming a hub for big business growth?
“Innovation has allowed New Orleans to survive and thrive for decades: from jazz to bounce music, from sea ships to space rockets, New Orleans has long been a place where necessity and soul have been the ‘mother and father’ of invention,” said Michael Hecht, President and CEO of Greater New Orleans, Inc. “Today, New Orleans offers a low-cost / high-culture combination that is very attractive to startups and entrepreneurs. The proof in this pudding was the over $2.5B of startup exits New Orleans enjoyed in 2021, and the wave of new founders in web3, bioscience, and F&B that are following.”
Ahead of New Orleans Entrepreneur Week (NOEW) taking place March 21-25, I chatted with Jon Atkinson, the CEO of The Idea Village. The nonprofit organization supports and retains entrepreneurial talent in New Orleans and the Gulf Coast region and puts on the annual event. What he’s noticed is how the area has transformed over the last 15 years since hurricane Katrina into a metropolis prime for entrepreneurial success. Here’s why.
Inherent Entreprenuerial Spirit
Sadly, the destruction of Hurricane Katrina left a lasting impact on New Orleans. But it laid the groundwork and sense of spirit that entrepreneurial dreams are made of. “You also had a huge influx of talent post-Katrina because New Orleans was a place where people came to volunteer, and then they fell in love with the city and stayed,” said Atkinson. “So, you had all these people coming in with new ideas and bringing in doing new things.”
To borrow a quote from Scott Cowan, who was the president of Tulane at the time, “Katrina made everyone an entrepreneur because everything had to be restarted.” So, it wove entrepreneurship into the DNA of the community in a way that wasn’t before.
Affordable Place to Live
Although NOLA has had some affordability challenges in recent years, it’s much more affordable compared to San Francisco and New York. “We’re still a relatively low-cost place to live,” said Atkinson. “For a startup that extends your runway. You can last longer, hire more people, and push in more directions.”
Basically, NOLA is San Francisco at half the cost with less-stressed people.
High Quality of Life
Affordability certainly helps with startup business goals, but New Orleans also offers an incredibly high quality of life, making it even more appealing. “It’s sort of high culture, low cost, which is attractive, particularly to millennials and gen Zers,” said Atkinson. “It’s a very walkable city, and this is a very close-knit community.”
For a startup, knowing that you’re living in a place where you can get access and connected quickly will make it easy to find the things that you need. It allows businesses more opportunities to pivot and succeed.
Low Business Costs
For founders looking to stretch every dollar they raise (or investors looking for a high impact market for their portfolio), New Orleans provides a perfect mix of low costs and high culture that will allow them to grow their companies in an attractive place that workers want to live, without bearing the financial cost of being in an expensive market. How’s that possible? Well, office rental rates are a fraction of what can be found in other markets, coming in at under $20/ft2for Class A space. Even more important is the Louisiana Digital Media Tax Credit that gives companies 25% cashback for all software development done in the state. This gives companies the extra cash to either pay their development team more, hire 25% more developers than expected, or bring savings to their bottom line – either way, it’s a deal that entrepreneurs can take to the bank.
Access to Logistical Resources
If a startup wants to build something involving physical products, it will need lots of logistical support. Well, guess what? New Orleans is brimming with that. “There’s a lot of warehouse space here, and we’re a port city, so there are plenty of transportation options,” said Atkinson.
He added, “I personally believe the forefront of innovation is moving away from consumer-facing business models enabled by the internet to more of the offline applications. This is a great place to do those things because we have resources in our backyard.”