Angels make themselves at home in New Orleans
Maturing start-up ecosystem sprouts wings
(March 27, 2014)
Angels are being born in New Orleans. Angel investors that is.
“Ours is a young ecosystem — there is a growing angel community but it’s a new community,” says Tim Williamson, the co-founder and CEO of The Idea Village, a non-profit that supports entrepreneurship in New Orleans. “We have a cohort of entrepreneurs who are succeeding. That group is mentoring the younger ones.”
One year away from the 10th anniversary of Hurricane Katrina, New Orleans is hard at work making its self-improvement evident to the deep scrutiny of the outside world.
Although progress is measurable, New Orleans’ challenge today is to further shift the economic development culture so that it can better embrace openness, collaboration, and interaction across groups, and create an economic base that is robust, inclusive and diverse.
Many are finding the answer in entrepreneurship, which The Idea Village is celebrating by holding New Orleans Entrepreneurship Week, its 6th annual week of workshops, pitches and networking all geared to New Orleans start-ups and investors. This week featured startups from the food, music, water and education worlds, as well as a special women’s business showcase. It culminates today and tomorrow in a series of pitch competitions and ends with a crowdsourced funding festival, The Big Idea.
“The entire (start-up) movement is still new and what’s positive is that it continues to grow. Not just in terms of start-ups but in terms of the ecosystem that supports them,” says Allison Plyer, Executive Director of the Greater New Orleans Community Data Center, an independent nonprofit that provide facts on the region.
“There is a lot of growth in the number of startups,” Plyer says. “We can see that there has been growth in the number of incubators. More recently there’s been growth in the capital infrastructure — we’ve had a couple of venture capital firms and now some growth in the angel networks, which is all really important to a robust ecosystem. “
The Greater New Orleans Data Center has been working in collaboration with the Brookings Institution to track how the region is doing.
“One of the post Katrina indicators we track is a measure of individuals starting up businesses,” says Plyer. “It has just skyrocketed , particularly post Katrina.”
Her research from 2013 — the New Orleans Index at Eight — found New Orleans has 501 business start-ups per 100,000 adults population compared to 320 per 100,000 adults population in the United States as a whole.
“That’s about 56% higher than the national average,” Plyer says. (Watch Plyer’s video report on New Orleans growth.)
The Kauffman Foundation’s Kauffman Index of Entrepreneurial Activity placed Louisiana among states experiencing the largest increases in entrepreneurial activity during the past decade. And Kauffman also placed the New Orleans SMSA as 19th of the top 20 metro areas by startup density.
There’s enough activity among local angels that The Idea Village is for the first time this year holding a “Demo Day,” a capstone event March 28 with local angels, Williamson says.
While start-ups are hot everywhere, not surprisingly New Orleans start-ups tend to focus on solving local problems, such as those with the environment and education.
A great example of this is Tierra Resources, founded by Sarah Mack, who earned her PhD in Global Sustainable Resource Management from Tulane University. Mack restores wetlands and pays for her work using certified methodology for creating and monetizing carbon offset credits.
Other players in New Orleans thriving start-up ecosystem include Propeller, a co-working space and incubator founded in 2009 that launches socially minded ventures to address problems with food, education, social justice, housing and environmental systems. It also runs a fellowship program and a startup competition called PitchNOLA , whose theme this year is “Sourcing solutions that will get New Orleanians healthier, more active and better nourished.” The April 24 competition will award $10,000 to the winning start-up. Another organization, Launchpad, is a co-working space with its own celebration of start-ups called LaunchFest.
Technology and the start-up charge is firing up New Orleans famously local arts scene, jazzing up creativity in everything from music to food to clothing. Launched in 2008, Prospect New Orleans is an international biennial art exhibition that celebrates the place, history and culture that is New Orleans and invites artists from around the world to exhibit throughout the region. In another example, the Blue Plate building, which is listed on the National Register of Historic Landmarks, has been rehabbed as the Blue Plate Artists Lofts, with a leasing preference for artists, as an anchor in a designated Louisiana Cultural District,
New Orleans greatest assets are the expats, those business people who left in the 80s but are finding their way home.
“That group is re-engaging. Some are moving back,” Williamson says. Some notable expats include Walter Isaacson, president and CEO of the Aspen Institute and billionaire James Coulter , whose wife is from New Orleans.
This year, The Idea Village is bringing together a group of 20 prominent expats — think James Carville — in a roundtable at the end of NOEW to discuss New Orleans future in anticipation of its 300 year anniversary in 2018.
Williamson and his colleagues who founded The Idea Village are themselves expats who left New Orleans in the 80s but came back in the year 2000 to find a city still in decline. Having worked at start-ups in other cities they saw with outsider’s eyes New Orleans’ problems with education, crime and political corruption.
“In a city with limited resource, we looked at Mardi Gras as a model for community collaboration,” Williamson says. “Nobody owns Mardi Gras. The community here connects in a way that other cities do not connect.”
“Manifestations of that are Mardi Gras season, or the Saints season or even Hurricane season. It is a very seasonal, rhythmic ritualistic community,” he says.
Prior to the year 2000, New Orleans had operated with closed insular networks, Williamson says. People didn’t want anything to change. They didn’t want new people in the City. If you were new or had a new idea, you weren’t welcome.
“If you do that for 50 years,” Williamson says, “that results in a broader community that just gave up.”
The Idea Village wanted to change that.
“Folks had given up on the city,” he says. “We wanted to create wealth and create change. The answer was building a network, which we called a village.”
They each put up $2,000 to create a $10,000 pot to award to a winning business plan and The Idea Village was born.
That was before 2005 and Hurricane Katrina, which raised awareness globally of New Orleans deeply embedded problems with education, the environment and inclusiveness.
Katrina fractured the networks, unleashed international good will, awakened local energy for change and brought resources to bear that contributed to scaling the start-up culture.
Post Katrina problems became reframed as opportunities, and The Idea Village continued to position itself as a major platform for those who wanted to create solutions.
In a start-up ecosystem, certain players till the soil to create good ground for entrepreneurship. Commitments by universities, advisory organizations, incubators, accelerators, co-working spaces, service providers, investor networks and other funders create a connective network for those ambitious souls starting up businesses.
Good ground is aerated by events, competitions and social networks that provide entrepreneurs visibility and access to seed money.
The hoped-for crop is cash for growing businesses — seed money from angels and investments from VCs and other private equity funds. Local angel networks provide cash with loose strings but they still expect a return, while venture capitalists are seeking high returns over a short period of time.
The return on the crop is new businesses and new technology, new job creation and a stronger economy. Of course, the angels and VCs want cold cash as their return.
This week, these players in the New Orleans entrepreneurship ecosystem are on display during New Orleans Entrepreneur Week. At least 13 national venture capitalists and private equity investors are attending. More than 5,000 entrepreneurs, businesses executives, prominent investors, and MBA students are signed up to attend 56 events. Tomorrow, March 28th, the final day of NOEW, 24 entrepreneurs will pitch to some of the country’s most notable investors and venture capitalists in three investment pitch competitions to win prizes ranging from $100,000+ in seed capital to a personalized tour of Silicon Valley’s investment community.
Williamson is excited about the way the New Orleans ecosystem is developing. “Our belief 14 years ago is that (we could address New Orleans longstanding problems) through Entrepreneurship. You find new leaders and new networks and you start to create a ground up movement that could challenge that. That is the only way it can work.”
Plyer from the data center says the wetland work under way in New Orleans is key because the future of New Orleans hinges on it. Places like New Jersey and New York, still recovering from Hurricane Sandy, are looking to New Orleans for leadership.
“What is interesting about these entrepreneurship movements, usually the vast majority of entrepreneurship activity that is driving an economy is entrepreneurship that is not very high profile,” she says. “The long and short is that entrepreneurship as we tend to observe it is very superficial and the way that it really happens is hard to observe.”
