By Kathie Stamps
Since the early 1980s, the Bluegrass Small Business Development Center has served business owners in 13 counties in Central Kentucky, particularly startups but also those interested in obtaining funding for growing their ongoing business.
Among SBDC’s program offerings is Grow Kentucky, which focuses on existing companies rather than a recruitment model. SBDC provides these second-stage businesses with high-intensity strategic information and advice, which typically results in a 20 percent top-line revenue increase within a year.
Bluegrass SBDC offices are in the same downtown building as Commerce Lexington, the successor entity since 2004 from a three-party merger of the Greater Lexington Chamber of Commerce, Lexington United and the Lexington Partnership for Workforce Development.
Commerce Lexington’s 1,700 member businesses have access to a range of support programs, including several incentive and funding sources geared toward tech companies. The $1 million Lexington Jobs Fund helps local companies expand and outside companies relocating to Lexington with operational grants of up to $100,000 or low-interest loans up to $250,000
In March 2015, Lexington issued an RFI, inviting any capable entity to propose high-speed broadband Internet connectivity via a fiber-optic network across Lexington as part of Mayor Jim Gray’s plan to make Lexington a gigabit city. A project manager and private consultant are helping the mayor’s “fiber team” work through a 29-page City Checklist from Google Fiber, the three-year-old gigabit service provider, which wants details about a topography, construction permit processes, existing infrastructure, expansion capabilities and more for its future planning consideration.
A related, game-changing infrastructure project broke ground in late summer 2015.
KentuckyWired will be a fiber network bringing affordable high-speed Internet connectivity to all 120 Kentucky counties over the next three years, starting in Eastern Kentucky. KentuckyWired is a public-private partnership with Kentucky state government and Macquarie Capital, based in Sydney, Australia.
Kentucky ranks near the bottom for U.S. broadband speeds. Groups like Advocates of Gigabit Internet in Lexington are eagerly awaiting continuous fast connections.
Plug into a network of support
Meanwhile, tech companies looking to relocate to Lexington, as well as Lexington businesses seeking expansion get collaborative help from Commerce Lexington, the University of Kentucky Coldstream Research Campus, and the Kentucky Innovation Network.
The Kentucky Innovation Network was established in 2001 by the Cabinet for Economic Development and became part of the Office of Entrepreneurship when that office was created in 2013. In June 2015 the Kentucky Innovation Network started an entrepreneurial pitch competition in Lexington, giving participants 10 minutes to present their business ideas to angel investors.
In2Lex is an open-source consortium founded in 2008 by Commerce Lexington for tech professionals and entrepreneurs; additional specialty networking groups are Bluegrass Biotech and RunJumpDev, the latter for the game industry community.
The Kentucky Business Investment program provides corporate income tax credits and wage assessments to relocating or expanding companies that meet at least two criteria: the creation of at least 10 new jobs with an average wage of at least $10.88 per hour plus 15 percent benefits, and a capital investment of at least $100,000. The Small Business Tax Credit program can provide a nonrefundable tax credit to businesses creating one job and investing $5,000 or more in qualifying technology,
Kentucky has the best match program in the United States for companies winning federal tech support. Matching funds up to $150,000 are available for Phase I and up to $500,000 for Phase II from the Kentucky SBIR/STTR Matching Funds Program. Lexington has recruited at least 25 companies because of the state match program.
Those here, old and new, now get help finding appropriate government projects to bid pm via the Kentucky Procurement Technical Assistance Center, which launched in September 2014. PTAC has counseled almost 300 clients who have been awarded $19 million in government contracts.
Based in Lexington and operated by the Small Business Development Center and UK, PTAC’s Bid Match is one of its free services. Using Boolean logic operator technology, the system scours hundreds of government procurement sites and sends local companies notification of appropriate bid opportunities.
For business owners who want to search on their own, bid opportunities from federal, state, local and foreign agencies are available at ksbdc.org/isearch.
And whether or not it is technology related, another great small business support entity is Lexington-based Community Ventures, where President & CEO Kevin Smith points to three areas where startups can really be benefited; through new market tax credits, micro loans and mid-range loans. He said Central Kentucky and the state as a whole have wonderful programs and are helping a lot of people.
“If you’re looking at job creation and large community impact then you have to point to the new market tax credit program,” Smith said. “We’ve put $179 million into Kentucky communities through new market tax credit investments.”
“When you’re looking at really making communities different and creating jobs, you just don’t find a program that can have an impact like new markets tax credits,” he added.
Community Ventures focuses on small business support in all stages, home ownership, and many other community programs since it was founded in 1993. From humble beginnings and a staff of one, it now manages more than $121 million in assets and has a 38-member team in five regional offices.
Even though the amounts of money invested at the outset are not as impressive, Smith said it’s the small business microloans that do the heavy lifting over the long haul and directly impact families on a daily basis. Through business training and micro enterprise, families are able to better themselves and ultimately their communities.
“On average those loans are about $9,000 to $10,000,” Smith said. “Where we saw the power of the micro loans is in the great recession when the banks pulled back from business lending. We would make about 80 to 90 a year, but when recession hit we got about 250 loans a year. I think it was the entrepreneurs who brought us out of that recession. They continued to create jobs, and I credit this micro loan program as part of what got us back on track.”
But it is not only about the money. Community Ventures, along with Lexington-based Kentucky Innovation Network and the Small Business Administration offer a wealth of, often free, mentoring and counseling opportunities for small business looking to get the ground running. Some of the businesses may need counsel even more than they need seed money.
“They’ll always tell us they need money,” said Rick Johnson, associate vice president of Kentucky Innovation Network. “It turns out, and sometimes they’re right, but many times they’re not ready for money. They need to add a key person or to fix a process, or to finalize a prototype, so typically there’s a little bit of coaching and mentoring they need before that. I would say the most important thing we do is we get them ready, so when they do get the money they can use it correctly.”
116 local high-tech firms and counting
Technology companies (as delineated by North American Industry Classification System (NAICS) codes) employ more than 143,000 at almost 1,100 facilities across the state, according to the Kentucky Cabinet for Economic Development. And of Central Kentucky’s 183 high-tech companies, 116 of them are in Lexington, the CED’s September 2015 industry report states.
On the University of Kentucky campus, the Advanced Science and Technology Commercialization Center is a business incubator for emerging technology-based companies; 26 companies were incubating at ASTeCC in the third quarter of 2015, and there were another 13 at the 735-acre Coldstream Research Campus five miles north on Bull Lea Road.
There was a major “graduation” in December 2014 by one company, Coldstream Laboratories, which UK’s College of Pharmacy launched in 2007 on the Bull Lea campus. Piramal Healthcare, a pharmaceutical company based in India, acquired it. The deal gave Piramal an FDA-approved drug manufacturing facility in the United States, and it gave Coldstream Laboratories the means to grow to 200-plus employees within the next four years.
The Coldstream Research Campus includes 66 companies and organizations, including the headquarters for Tempur Sealy International and A&W Restaurants Inc., and the regional facilities for Allconnect, Henry Schein Animal Health, HP Exstream and Joy Global. At Coldstream, “where business and research connect,” tech companies have access to researchers with national recognition through the university. Coldstream Research Campus can also assist business owners who are looking for federal grants and other funding assistance.