Venture

VCs and founders are finding life easy in the Big Easy

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New Orleans Trombone
Image Credits: TechCrunch / Bryce Durbin

The good times are starting to roll in the New Orleans startup ecosystem.

TechCrunch spoke to local founders and investors for a vibe check: How is the city emerging as a tech hub? A flood of both founders and capital is entering the market; that, coupled with tax and business incentives to keep them there, makes NOLA an attractive place to start a business.

The city minted its first unicorn in 2021 when software company Lucid sold for $1.1 billion to Swedish tech firm Cint Group. That same year, Shutterstock acquired the animation studio TurboSquid for $75 million, and Procore Technologies acquired NOLA-based software construction company Levelset for $500 million.

Of course, there are a few issues NOLA must overcome for it to be a true tech hub, founders and VCs told TechCrunch: There’s a lack of technical talent, making it hard to find local people to hire. Although money has been flowing in, the city needs more capital to keep up.

Overall, New Orleans-based startups raised about $83 million last year, according to Crunchbase data. Black founders received more funding in New Orleans than national averages: In 2021, Black founders in New Orleans raised almost 3% of all venture funding for the region; that’s more than the 1.3% of all VC money Black founders raised nationwide.

For the most part, investors coming to the city almost have no choice but to fund Black founders, considering the majority of the population is Black. “We had the first wave of people that tried to come with a more, what I would say, colonialist mindset, and they by this point either stayed and realized you can’t change New Orleans, or they’ve gone and left,” said Skilltype founder Tony Zanders, who is from the area.

Sevetri Wilson, the founder of software company Resilia, is from New Orleans and now splits her time between there and New York City. She said it has grown in the past few decades as a tech hub, but she recalls a time when there was no capital to raise in the city at all.

“Now you can find several angel syndicates and funds,” she told TechCrunch. “So many investors tell me that they looked at a deal in New Orleans years ago and passed and that they end up regretting it.”

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Zanders said that as a Black man, he’s received much more investor interest in New Orleans than he would have in New York or the Bay Area.

He said that New Orleans is a place “where people are used to seeing Black people in high-ranking positions or running businesses,” including the city’s most influential politicians, such as Mayor LaToya Cantrell. A recent Tulane report looking at startups based in New Orleans found that about 25% of the city’s founders identify as Black.

ˇData visualization by Miranda Halpern, created with Flourish

But racial diversity is just the start: Companies founded by women also tend to do well in New Orleans, and the Tulane report found that women-founded companies increasingly seek venture capital to finance their businesses. Last year, during a period of venture pullback, women-founded companies raised $55 million, or 66% of all capital raised in New Orleans. Nationally, companies with an all-women founding team raised 1.9% of all venture capital last year, while mixed-gender teams raised 17.2%.

Data visualization by Miranda Halpern, created with Flourish

New Orleans has benefited from the increased popularity of remote work, especially as founders learned that investors were willing to back them, no matter where they were physically located. This type of flexibility allowed entrepreneurs to tap into various talent pools. Some founders pointed to the lack of Big Tech companies in the area as one reason for the lack of talent: Students get their degrees and move elsewhere to look for jobs.

Kimberly Foster, the dean of the Tulane University School of Science and Engineering, told TechCrunch that Tulane’s programs are growing in the engineering and technology space. She said the average student comes from more than 900 miles away to attend Tulane, and she said that many of them want to stay in New Orleans after graduating, though, right now, only 25% actually do.

“Our innovation programs hope to partner with the city to enable growth in the tech space,” Foster said. The university’s growing offerings include three ABET-accredited engineering programs and a new online master’s program in computer science. The school is in the process of building a CS certificate program and is about to unveil a new minor in civil engineering.

“We also have a unique Ph.D. program in bioinnovation, which is a more entrepreneurial look at bioengineering and includes internships with the FDA,” Foster said. “Given the medical technology base in the city, this is an area in which the city and university can interact in positive synergy.”

There are also some political and social challenges the city must overcome to expand its tech prominence, said Jon Atkinson, the CEO at NOLA-based entrepreneurial nonprofit The Idea Village. He said that addressing the actual livability of the city is what will help the startup community build momentum.

“Crime, reliability of infrastructure and access to opportunity for all remain our most significant headwinds to future growth,” Atkinson said.

Multiple founders and investors told TechCrunch that New Orleans would benefit from working with neighboring cities, such as Baton Rouge, to create a tech region akin to Silicon Valley, Courtney Stuckwisch Wong, the deputy director of New Orleans’ office of economic development, said that the mayor has “unwavering support” for the city’s emerging tech community and that her office is working hard to build an inclusive environment for founders.

Stuckwisch Wong pointed out that the city is sponsoring a pitch competition called Future Tech Challenge during its Entrepreneur Week later this year, hosted by Atkinson’s The Idea Village. It also helps sponsor numerous entrepreneur support organizations, which provide resources to bolster tech companies and founders of color.

“The City of New Orleans also supports the tech ecosystem by providing letters of support to ESOs for grants by facilitating connections between industry and institutes of higher education to grow our tech workforce,” Stuckwisch Wong told TechCrunch. “And the city is continually working to increase access to capital for entrepreneurs, especially for entrepreneurs of color.”

Support from the city, with added attention from local universities, will help encourage and foster what could be New Orleans’ next beacon.

After all, success breeds success, and Zanders said he thinks that more investors would be attracted to the city if there were more billion-dollar exits and proof points that venture dollars can turn into outsized returns. Peter Liu, the founder of Revelry Venture Partners and who recently moved to New Orleans from Santa Monica, agreed.

“In most emerging markets, it’s usually emerging funds that act as the ‘first signal’ for firms on the coasts,” he told TechCrunch. “We definitely need more folks who are willing to do that hard work.”

Still, more successful companies are on the horizon. New Orleans is a young tech market; this generation of talent can shape the industry as it wants. The early money and opportunities are there, the talent is burgeoning and jazz is still playing.

“We’re about to see a different interpretation of what a tech ecosystem could look like,” Zanders said.

This piece was updated to reflect that Peter Liu moved from Santa Monica to New Orleans. 

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