From BG Magazine (a publication of The Lane Report)
Everyone knows Lexington has horses, bourbon and basketball but it also is quickly gaining a reputation for its technology business sector.
For example, earlier this year Funai Electronic Co. Ltd., was one of more than 20 companies to announce its opening in Lexington. The company, which will be located on the Lexmark campus, is a subsidiary of a multi-billion dollar company headquartered in Japan and will employ nearly 50 people, with an impressive average wage of $100,000 year.
“This is a prime example of an innovative company teaming up with an innovative and high-tech workforce,” said Gov. Steve Beshear in a press release about the corporation that represents a $4.2 million investment in Kentucky. “Kentucky’s reputation for employing educated and skilled workers is gaining the attention of companies around the world.”
Funai Lexington Technology Corp. will support research and development in the inkjet and microfluidic technologies. Microfluidics is the use of engineering, science and technology to design systems in which small volumes of fluids will be handled. In April 2013, the company announced the acquisition of Lexmark’s inkjet technology assets, more than 1,000 patents and a manufacturing facility in the Philippines.
Funai has been a design and contract manufacturer for Lexmark International since 1997.
The company was preliminarily approved for tax incentives up to $1.2 million through the Kentucky Business Investment program.
Funai is one of many high-tech companies moving to Lexington. The city is fast becoming
a leading location for high-tech information jobs. In a recent job index report by the Atlantics Cities, Lexington was ranked 17th in America’s Top 25 High-Tech Hotspots. Lexington grew 14.2 percent in high-tech information jobs from 2007 to 2012.
Mayor Jim Gray said bringing good jobs to Lexington was one of his main objectives when taking office three years ago.
“Create jobs and create the environment that will create good jobs, run government efficiently, and build a great American city,” he explained. Everyone in the world wants a good job. And today more people are
employed in Lexington than ever before — but we can get stronger.”
The jobs are coming to Lexington because the talent is here, Gray added.
“Today, the jobs are going to where the talent is located,” he said. “And since we live in a university city, we’ve got loads of talent. That’s why quality of life and quality of place are so important, keeping our home grown university talent and attracting even more. Place-making is about attracting entrepreneurs, innovators and high-tech companies to locate in Lexington, plus helping existing businesses to grow.”
The city’s strong relationships with University of Kentucky, Transylvania University, and Bluegrass Community and Technical College help make Lexington a hub of talent and innovation, Gray said.
NOHMs Technologies Inc. can attest to that. The battery development company moved to town in 2013 because of the University of Kentucky’s research capabilities.
“Lexington’s a nice place to live and the state has been very supportive, but the big reason we’re here is because the Center for Applied Energy Research here at UK,” explained Nathan Ball, CEO of NOHMs. “The center has a battery research development lab. There is a big dry room with no moisture in it and there’s a big clean room as well, which is a room with no dust in it and it’s equipped with everything we need to do battery research. It’s a facility unlike anything else in the country that’s open access.”
NOHMs is one of nine tech companies that moved to Lexington in 2013, adding 190 new jobs and investing $7.5 million.
“We’ve found a combination of incentives that gives us a competitive advantage over other cities, especially with high tech companies. And now we’re improving our odds with the Jobs Fund, a unique program that will make Lexington even more attractive to industries with high wages,” Gray explained in a press release earlier this year.
Teamwork has been a successful strategy for Lexington. The Bluegrass Business Development Partnership, a collaboration among the city, Commerce Lexington and the University of Kentucky, works to attract and grow jobs through a combination of incentives. The nine companies received federal Small Business Innovative Research (SBIR) grants and were drawn to Lexington, in part, by the state’s match program, as well as the partnership’s rent subsidy program for companies that have received a state SBIR matching grant.
The nine companies that moved to Kentucky include Bauer Labs, Directed Energy Inc., Hitron Technologies, Inc., Mercury Data Systems, New Global Systems for Intelligent Transportation Management, Nicolalde R&D, NOHMs Technologies, Inc., Science Tomorrow and Twin Star TDS, LLC. The companies are focused on software and IT, renewable energies, communications, life science solutions and advanced manufacturing.
NOHMs, which originated in Ithaca, N.Y., in 2011 as a Cornell Technology startup, moved five highly educated people to Lexington from upstate New York last year, and has since hired five more locally. NOHMs also operates a location in Rochester, N.Y.
Ball, a Houston native who has a master’s degree in chemical engineering from King Abdullah University of Science and Technology in Saudi Arabia and also spent time working in Beijing, said the $20 million University of Kentucky facility made perfect sense for his blooming business.
NOHMs has multiple clients and partner and has worked hard to secure funding for its costly research. Ball said the line of work was something he got involved in while his wife was getting her doctorate in biomedical engineering at Cornell and joked that “there is not much else for an engineer to do in Ithaca” besides work with Cornell tech startups. He ultimately co-founded the company with a Cornell professor.
NOHMs has developed a battery that is based on lithium-sulfur chemistry. The company’s vision is to commercialize lithium-sulfur battery technology to revolutionize vehicle markets, including everything from spacecraft to electric automobiles. The company believes its lithium-sulfur batteries can deliver enough energy at a cost low enough to allow mass commercialization of electric vehicles.
“For electric vehicles, the biggest problem is they are far too expensive,” Ball said, adding that Tesla Motors pays about $30,000 apiece for the batteries in its cars and is subsequently building a plant in California to produce them at a lower cost. “With our technology, we replace some of the expensive materials and components inside lithium ion batteries with sulfur, which is a very low cost and abundantly available and environmentally friendly material, that also happens to have much higher energy and better performance than most lithium ion batteries today.”
The United States Air Force by 2017 will be utilizing batteries developed by NOHMs for their radios. Ball said his company also is working with a North American cell phone manufacturer that’s very interested in the technology. Auto manufacturers also are looking into NOHMs’ technology.
He pointed at 2022 as a possible completion target for vehicle batteries, explaining that they take longer to develop — largely because of the obvious aversion to risk by auto manufacturers — but the market is enormous.
As is the potential for NOHMs to grow.
“We started from very humble beginnings with no money, no personnel and no facilities,” Ball recalled. “So we wrote a bunch of grants and tried to get funded. We got funded by the Air Force project. They were interested in looking at lightweight battery technology, which we have. We have since had a lot of success not just through the the Air Force, but through other Department of Defense programs, and we’ve had lots of support form the National Science Foundation.”
Ball said Kentucky has been a wonderful partner, specifically for the laboratory opportunities, partnerships with the automotive sector, and support from organizations such as the Kentucky Science And Technology Corp., the Kentucky Cabinet for Economic Development and local investors like the Bluegrass Angels.
Gray hopes to continue to attract and retain more high-tech companies.
“Lexington is investing in basic public services in our neighborhoods such as a public safety, street paving, sewers and parks,” he said. “The project to reinvent Rupp Arena and create an arts and entertainment district everyone can enjoy is an investment that will create jobs and attract private investment.”
Lexington recently launched the JOBS Fund, an incentive program that provides gap financing aimed at companies with high potential. The city committed $1 million to the fund.
“This type of investment supports job growth through the expansion of existing companies and by attracting new businesses to our city,” Gray said.
“And we also recognize how vital high-speed Internet access is, not just for growing technology-based jobs, but all industries and residents,” he added. “My office is monitoring the efforts of Gov. Steve Beshear and Congressman Hal Rogers to support the expansion of broadband access in Kentucky, and working on efforts that will benefit Lexington. In a global economy, cities must provide the right tools and infrastructure to help businesses stay competitive.”
The work is paying off and the feedback is coming in. When Bingham McCutchen, an international law firm, chose Lexington last year over 300 cities for their Global Operations Center, “they gave us great feedback,” Gray said.
“They loved Lexington’s educated workforce, our tremendous quality of life and our optimistic spirit,” he added. “Like other university cities, we have lots of individuals with degrees, we have an outsized arts and culture sector, we have attractive neighborhoods and yet we have a low cost of living. It is rare to find that combination, but Lexington is in that sweet spot.”
Some of the companies making waves in Lexington
During Global Entrepreneurship Week at the end of 2013, the Lexington Venture Club recognizing the first recipients of the Lexington eAchievers award for excellence in entrepreneurship.
Twenty-five start-up companies in the Bluegrass region were honored with the award for receiving at least $1 million in funding and/or creating five new jobs in fiscal year 2013. Together, these companies raised more $25 million in capital funds, created 89 new jobs, and have a combined average annual wage of over $60,000. The companies represent industry sectors in biotechnology, advanced manufacturing, IT and software development, energy technologies and business services – further demonstrating Lexington’s position as a leading location for technology-based jobs.
The companies recognized included:
• AllTranz Inc.
• AntiOp LLC
• Biomedical Development Corp.
• Coldstream Laboratories Inc.
• Equinext LLC
• Four Tigers LLC
• HFL Sport Science Inc.
• Hitron Technologies Inc.
• iHigh.com Inc.
• Invenio Therapeutics Inc.
• Naprogenix Inc.
• Net Law Group LLC
• New Global Systems for Intelligent Transportation Management Corp.
• nGimat LLC
• Summit Biosciences Inc.
• TeleHealth Holdings LLC
• Transposagen Biopharmaceuticals Inc.
• uHAPS, Inc.
• Vindico NanoBioTechnology Inc.
• Xact Communications
For more information about the Lexington Venture Club, visit lexingtonventureclub.com.
Attracting small businesses
Earlier this year, 26 high-tech Kentucky companies were awarded $6 million in state funds in 2013 as part of a program to support and attract technology-based small businesses to the commonwealth.
The companies are receiving funding through the state’s competitive Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds program. Kentucky’s program matches all or part of federal SBIR-STTR awards received by Kentucky-based companies. It also provides a match to out-of-state companies, should they be willing to relocate to the commonwealth.
Since its inception in 2006, Kentucky’s SBIR-STTR program has awarded nearly $43 million to support 90 companies. These 90 businesses have leveraged an additional $76 million in federal funds and created nearly 400 jobs. A total of 28 companies relocated their businesses to Kentucky for the program. Last year, of the 26 grant recipients, nine are relocating to Kentucky from as far away as Oregon.
Abby Laub is editor of BG Magazine. She can be reached at [email protected]