Chris Schultz divides his years in New Orleans into pre-K and post-K periods—pre-Katrina and post-Katrina.

For Schultz, founder of the technology incubator Voodoo Ventures, the difference is that stark. What Schultz—who founded and sold an Internet travel business, Destination V.I.P., before moving to New Orleans from Los Angeles in 2002—has seen in the last five years is new blood in the Big Easy.

“We had an amazing ‘brain gain’ post-K of smart, passionate young people moving to New Orleans to make a difference,” the 36-year-old told Portfolio.com. “Many of them have decided to start companies. A typical description of NOLA pre-K would have been as an ‘old boys’ network’ that was difficult for newcomers to break into, but it’s not anymore. The community has embraced the newcomers who are making change.”

Five years ago this month, the residents of New Orleans were taking stock of their battered and flooded community. Some outside New Orleans even questioned whether the city should be rebuilt. But that pessimism lost out to a greater impulse: reinvention.

Evidence of this comes from a Brookings Institution report released last month showing that New Orleans has surged past the rest of the United States in business creation. Nationwide, an average of 372 people out of 100,000 are starting businesses. Before Hurricane Katrina, the New Orleans metro area lagged the nation. But today, it’s far ahead, with 450 per 100,000 people creating a new endeavor.

Other measures of business vitality, however, aren’t as optimistic. The Brookings report also found that the number of patents in the New Orleans area has fallen to 21 applications per 100,000 people, six times lower than similar metros. That suggests those new businesses may be creating jobs or income, but they aren’t generating groundbreaking ideas.

This is where Schultz and other New Orleans entrepreneurs and small-business owners come in.

Schultz has helped newcomers by aiding the creation of one of Launch Pad, a space for entrepreneurial companies, and initiating TribeCon, a New Orleans tech conference aimed at leveraging online communities for off-line action.

His company develops Web applications, but he has reached beyond that to take on a mentoring role for several new firms. Prior to Katrina, Schultz said, he concentrated on building his own technologies. After the hurricane, he also became an angel investor, putting his own money on the line for entrepreneurs. He plans to get into full-fledged venture capital work by raising a fund from others next year for investments in New Orleans. At least one other venture firm with an interest in New Orleans exists—Barrett Vernon Montgomery LLC—but Schultz said there’s room for more investment in his city.

One of the businesses backed by Schultz's Voodoo Ventures is Jackson Square Group, a high-tech marketing automation firm that, since its founding in March, has hired 10 people. Though it’s a private company that doesn’t release financials, Jackson Square’s founder, Patrick Comer, said revenue this year is ahead of projections. Comer previously had worked in London and Los Angeles, but moved to New Orleans two years ago partly because his wife was from a large area family.

Comer actually could have run his business pretty much anywhere. But besides the family considerations, financial breaks offered by the state of Louisiana helped convince him to start a business in New Orleans. Among the benefits: a 25 percent tax credit for digital media purchases made in Louisiana and a 35 percent credit for jobs created in the state. This year, the state added a new incentive for limited liability corporations—no state capital gains taxes should they get sold. That’s a big plus for a high-growth, high-tech startup where the goal is often to sell to a larger firm.

Comer also discovered something else: eager and cheaper talent. Even though New Orleans lost people after the storm—nearly 600,000 residents left, dropping the city from the nation’s 35th largest market to the 49th, according to a survey by the Nielsen company—the city’s cost of living is about 43.1 percent less than that of New York.

And in New York, Los Angeles, or Chicago, Comer’s company would be just one of many startups. In New Orleans, a small company like his can have a bigger impact. “There really is that concept of big fish, small pond,” Comer said. “You’re not just building a business, you’re supporting the community. Every job really, really matters. It’s been really awesome. We have a tremendous amount of talent. We have a tremendous amount of support.”

Another advantage Comer found to starting his business in New Orleans was amenable office space. He moved into the Launch Pad, one of several shared-office-space buildings and entrepreneurial incubators that have come to life in post-Katrina New Orleans.

Launch Pad houses 60 companies with 95 employees in a renovated building on Canal Street in the city’s central business district. It was founded in 2009 by Schultz, Will Donaldson, and Barre Tanguis and funded by VCE Capital, a generalist venture capital firm with offices in Louisiana and New York. The location—blocks away from the city’s famed French Quarter and a streetcar ride from the Spanish moss-draped mansions of its Garden District—provided low-cost digs and a collaborative environment for Comer to get up and going.

Other spaces for entrepreneurs founded since Katrina include the IceHouse, in the historic Fauburg St. John neighborhood; The Idea Village, a cluster of offices in the Upper Ninth Ward funded originally by Entergy, which celebrated its grand opening last month; and Entrepreneurs Row, a loft-like office space.

These incubators are especially beneficial to companies in the digital-media spaces because they are set up as spaces for collaboration and wired for digital companies. But New Orleans is counting on more than just those new businesses. It’s hoping for success by grabbing pieces of biotech and cleantech industries as well as leveraging its relationships with Hollywood:

• Biotech: The post-Katrina construction of the Louisiana Cancer Research Consortium is under way, and the city’s BioInnovation Center has recently been completed, forming the core of a biotech district aimed ultimately at spinning off companies from the research conducted.
• Cleantech: This, right now, is more an idea than a reality. But a McKinsey study for the metro area’s nonprofit economic development group, Greater New Orleans, Inc., shows that Louisiana could create 90,000 jobs by focusing on developing a cleantech industry.
• Star Power: Louisiana is the third-largest state for filmmaking behind California and New York. And while it was attractive to filmmakers before Katrina, it has since benefited from the star power the industry brings. That’s been exemplified by Brad Pitt’s commitment through the Make It Right Foundation to build low-cost, high-quality homes in the lower Ninth Ward, which was devastated by Katrina, and the mansion he and Angelina Jolie bought in the French Quarter. Singer Harry Connick Jr., through Habitat for Humanity, has been involved in building 72 homes and five duplexes for displaced musicians.

Beyond the newer industries, New Orleans and its environs remain heavily dependent upon some old standbys. Tourism, oil and gas, and shipping still provide the most important private-sector jobs for post-Katrina New Orleans, according to the Brookings study. Tourism is rebounding, with 7.5 million visitors coming to the city last year, though it hasn’t reached its 10 million pre-Katrina peak.

Oil and gas jobs have declined over the past decade, though they’re still the highest-paying gigs around, according to Brookings; it’s too soon to tell what impact the Deepwater Horizon disaster will have on those jobs. The Port of New Orleans still accounts for 160,498 direct and indirect jobs.

Five years after Katrina, New Orleans is still very much a work in progress. But the city’s business community is at least trying to diversify an economy devastated by the killer storm, even if it’s too early to tell whether they’ll succeed.

“There is a realization at the highest levels that our traditional economic drivers (oil & gas, tourism, the port) need to be augmented,” Schultz said. “I believe that market-driven investments rather than recovery grants will ultimately be what makes the startup scene in New Orleans competitive nationally. This is my way of giving back, yes, but also I am looking for opportunities, and New Orleans is ripe with them and underserved from a capital perspective.”

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Kent Bernhard Jr. is News Editor of Portfolio.com