NEW ORLEANS – U.S. startups are contending with a complex economic landscape shaped by recent shifts in trade policy. The imposition of new tariffs have heightened economic uncertainty leading businesses to adopt a more cautious approach to investing.
According to Business Insider, venture capital funding has seen a notable decline, with fundraising reaching six-year lows. The current market volatility and policy uncertainties have made investors more risk-averse, leading to postponed Initial Public Offerings (IPOs) and a general slowdown in startup funding.
In addition, small business optimism has decreased with concerns over trade policies and economic stability contributing to the decline, affecting hiring plans and sales expectations.
This situation has thrown a spotlight on the “Valley of Death” phase of the start-up lifecycle. Occurring after initial funding has been secured but before the company begins generating consistent revenue, this period can be particularly risky.
“While seed investors get excited about $1M annual recurring revenue, series A investors want to see $5M or more. That gap is both difficult and structural,” said Mickal Adler, General Partner at Boot64 Ventures and Of Counsel at Blue Williams, LLC, a law firm based in Metairie.
The “Valley of Death” phase involves product development, business model validation, and efforts to attract customers all while operating with limited cash flow. This phase is marked by high expenses and uncertain income, making it a precarious time where many startups fail if they cannot secure additional funding or reach profitability.
“When you hit $2-3M, you're suddenly too expensive to fail cheaply but not valuable enough to save,” said Adler. “Your 20-person team is burning $200-300K monthly. Your revenue is growing but not fast enough to outrun your burn.”
According to Adler, options narrow quickly during this period because seed investors have already deployed their funding, series A firms want to see another 6-9 months of growth, and acquirers aren't necessarily interested, particularly during times of economic turbulence.
“Cutting staff might save cash but it kills your growth story,” said Adler. “Twenty to twenty-five percent of startups who raise seed rounds don’t raise Series A,” said Adler.
According to Adler the founders who survive this aren't usually the ones with the most innovative products or the biggest vision but those who make brutal decisions. “They fire good people before they have to fire everyone, they abandon promising features that aren't converting to revenue, they focus exclusively on the customers who pay fastest, not the ones they hoped to serve, and they raise money when they can, not when they need it,” said Adler.
When people talk about startup failure rates, they typically focus on early-stage flameouts, but many companies die after hitting initial traction. “Getting to $2M is an achievement, but don't mistake it for validation,” said Adler. “It's walking into the woods. Pack accordingly.”
Local Support for Start-Ups
Support for startups in 2025 in the New Orleans region is still vibrant despite the economic instability. From March 24 to 29, the 14th annual New Orleans Entrepreneur Week (NOEW) featured a series of well-attended events to support business ventures including the NOEW Summit at Loyola University which brought together founders, investors, and innovators for panels, workshops, and networking opportunities.
The week also included the 3rd Coast Venture Summit from March 26–28, connecting Gulf South startups with national investors, and Loyola University's IDEAcorps MBA Consulting Challenge, where MBA teams collaborated with local startups on strategic projects. Additionally, BioSpark@NOEW on March 24 focused on biotech ventures, and Tulane University's Innovation Institute hosted a Startup Sprint to foster early-stage innovation.
While businesses are cautious, the economy has seen a rise in smaller, more adaptable startups, according to the Wall Street Journal. These businesses often operate with fewer employees and utilize flexible strategies, allowing them to navigate economic uncertainties more effectively.
In addition, some sectors, like artificial intelligence, continue to attract investment according to the Wall Street Journal. Startups leveraging AI and other emerging technologies are finding opportunities to innovate and meet evolving market demands.
To further their aims in the New Orleans region, entrepreneurs can participate in ongoing programs such as the Tulane University Innovation Institute’s Startups Mentorship Program offering regular sessions to support business development.
StartupNOLA is a hub of information, serving as a central location for the Greater New Orleans entrepreneurial ecosystem, connecting startups, investors, and support organizations to foster innovation, provide resources, and promote economic growth in the region.
StartupNOLA has organized several events, including the "StartupNOLA Now" series, which features monthly networking gatherings for founders, investors, and community members. Notable events include the April 9, 2025, Open MIC Night in partnership with Tulane University's Innovation Institute, focusing on medical innovation pitches. Additionally, the "Techstars Startup Weekend — New Orleans" is scheduled for May 16–18, 2025, providing an intensive startup experience for participants.
The Idea Village has also been instrumental in supporting startups. Their upcoming events include the "VILLAGEx Demo Day" on May 1, 2025, showcasing startups from their accelerator program. They also host the "Work in Tech" networking event, with the next session on May 18, 2025, aimed at connecting tech professionals and job seekers. The "IDEAinstitute Pitch Night" offers founders an opportunity to present their ventures to a panel of judges, with the next event scheduled for Nov. 21.
