New Orleans Startup Fund

It hasn't turned out that way. So far their investment company, Abstraction Ventures, has invested in 13 young companies - 11 of them in or around New Orleans. Typical investments range from $25, 000 to $100, 000.

"I've pretty much focused all our energy here because there's so much opportunity, " Nagarajan said recently. "As far as I'm concerned, as an investor, there's no reason to go anywhere else."

Some investors, like Nagarajan, have set up shop in New Orleans. And their presence represents an important structural change in the local economy, providing young companies with early access to capital.

"We're fuel. We're the liquid you squirt on the fire, " said Clayton White, who heads South Coast Angel Fund, a consortium of about 45 investors looking to buy into promising new Gulf Coast companies, mostly around New Orleans. South Coast typically invests $250, 000 to $1 million in a company it likes.

White said three local companies are now in the South Coast portfolio, most recently Crescent Unmanned Systems, a start-up based in Jefferson Parish developing a new unmanned aerial drone.

"Before Katrina, none of this was here, " White said. "Other than friends and family, there was no capital here."

Now, however, "out-of-state investors are beginning to feel it's worthwhile coming to New Orleans to hear various pitch sessions because there are good investments here, " said Leslie Jacobs, the longtime education reformer who has become part of the New Orleans StartUp Fund, a nonprofit group that uses public money and private grants to invest in start-ups in the 10-parish area around New Orleans. It has invested in three companies so far.

6 RISING COMPANIES

Audiosocket: Founded in Seattle by New Orleans native Brent McCrossen and Jenn Miller. Moved early from Seattle to New Orleans. Serves as an online music licensing agency.

"That's a sea change, " said Matt Wisdom, the chairman of the New Orleans StartUp Fund and co-founder of TurboSquid, a digital media company that sells 3D software models to filmmakers and other customers.

"It's gone from, 'You're crazy to locate your company in New Orleans, ' to 'You're smart' - in not that many years."