New Orleans: A Startup Laboratory

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There are signs that startup activity is on the rise. Idea Village, a New Orleans nonprofit dedicated to fostering entrepreneurship, has received 1,015 applications for grants, loans, or nonfinancial assistance since the storm. All but 2% or 3% came from existing businesses until this year, according to Tim Williamson, the group's president, but since January, 36% have been for new ventures. "In the first year, it was just people coming back. Now there's people coming in, really coming to us saying: 'We got new ideas,' " Williamson says.

Encouraging Startups

Idea Village is part of an existing infrastructure that supports entrepreneurship in the city. The group plans to launch a series of Business Innovation Centers, the first of which is set to open in the Upper Ninth Ward on Aug. 25, to bring resources to business owners in their neighborhoods. Another group, the Entrepreneurs' Organization Accelerator, was launched after Katrina to help early-stage companies grow.

"Everybody wants everybody to succeed, and I think if anything Katrina has motivated people to open it up more," says Neel Sus, an Accelerator member and Tulane grad behind a pair of startups. Sus quit his job at Northrop Grumman (NOC) last year to focus on SusCo Solutions, his business-process improvement firm. His other venture, eLYMPUS, is developing a way to send patient information to doctors' smart phones, an advance he hopes will improve care in the city's struggling hospitals.

Most of these go-getters root their companies in New Orleans because they believe it is up to entrepreneurs—not the government or Big Business—to rebuild the city. Shawn Burst, who licensed an innovative system of modular building materials from a German businessman, said he placed his firm in his native New Orleans even though his target market is Northern California. Burst, 41, has plunged $2 million into the venture, called Jeriko House, and he's building a prototype on Canal Boulevard. "Everyone's leaving. The climate has been that businesses are leaving," he says. "Maybe this will open people's eyes and make them look at what's happening down in New Orleans."

Post-Katrina Possibilities

It's too early to say what role these young companies will play in shaping the city's uncertain future. But the entrepreneurs say their ventures show that New Orleans is rising. That's what Robert LeBlanc intended when, less than four months after Katrina, he opened Republic New Orleans, a nightclub and creative center that has become a hub for newcomers and repatriates alike.

"Everybody knows that there have been a lot of problems endemic to New Orleans, and a lot of that is because it has been such an insular city for such a long time," LeBlanc says. "We wanted to do things to connect the people who are in New Orleans with the new people who were coming to New Orleans, to create those bonds and those communities."

Williamson, of Idea Village, sees the new energy in the city as the vanguard of a larger movement. "The sense of possibility is more than it was before Katrina," he says. "If you're into innovation and entrepreneurship, New Orleans is a laboratory for that right now."

See our slide show for profiles of more entrepreneurs who started businesses in New Orleans, and hear what attracted them to the city.

John Tozzi is an intern for BusinessWeek.com.