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Kentucky Innovation Act

Programs Managed by the Department of Commercialization and Innovation and State Funding and Incentive Programs University of Louisville Business Boot Camp III. Kentucky Innovation Act. House Bill 572 – 2000 KY General Assembly Promote applied research in postsecondary institutions

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Kentucky Innovation Act

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  1. Programs Managed by the Department of Commercialization and Innovation and State Funding and Incentive Programs University of Louisville Business Boot Camp III

  2. Kentucky Innovation Act House Bill 572 – 2000 KY General Assembly • Promote applied research in postsecondary institutions • Encourage business innovation • Attract high-tech enterprises to Kentucky • Advance higher-order skills of an educated workforce • Create the Kentucky Innovation Commission • Establish Department of Commercialization and Innovation (DCI), Cabinet for Economic Development • Innovation and Commercialization Center Program

  3. Facilitating a New Economy Knowledge Creation (Innovation) Business & Job Creation Business Growth & Wealth Creation Commercialization Revenue Investment DCI Overall Role Help inventors/entrepreneurs commercialize technology Attract and retain highly educated people Attract high-tech entrepreneurs and businesses Generate higher salaried jobs

  4. Implementing a New Economy Specific DCI Responsibilities Implement the Kentucky Innovation and Commercialization Center Program: now 6 regional Innovation & Commercialization Centers (ICCs) and 7 local Innovation Centers (ICs) Monitor the return on investments and effectiveness of the Kentucky Innovation Act Build infrastructure for the New Economy to promote networks of technology-driven clusters and research-intensive industries Support the growth and creation of R&D and high-tech companiesin technology focus areas

  5. Technology Focus Areas Five technology focus areas: • Human Health and Development • Information Technology and Communications • Biosciences • Energy and Environmental Technologies • Materials Science and Advanced Manufacturing (Nanoscience and nanotechnology are cross-cutting) Fast start areas: • Clean Energy • Animal Health • Neuro and Rehabilitation

  6. DCI-Funded Programs Innovation and Commercialization Center Program The Innovation and Commercialization Center Program is authorized by KRS 154.12-305 for the purposes of creating “… products, new companies, and value-added jobs in communities throughout the Commonwealth.”

  7. DCI-Funded Programs Innovation & Commercialization Center Program Supports start-up and existing companies through the concept and development phases, including: • Market research • Prototype development • Business plan and strategies development • Grant and contract capabilities • Capital and management resource identification Program managed by DCI and administered under contract to DCI by the Kentucky Science & Technology Corporation.

  8. DCI-Managed Funding DCI manages High-Tech Pools: Used for projects that create high-tech jobs and knowledge-based companies with the goal of creating clusters of innovation-driven industries in Kentucky. The commissioner recommends funding of companies to the Kentucky Economic Development Finance Authority (KEDFA) for approval. http://thinkkentucky.com/dci/pdfs/DCI%20High-tech%20Pools_FACT%20SHEET%20FINAL.pdf

  9. DCI Funding Requirements High-Tech Pools As a general rule, the company seeking funding must meet these criteria: • Technology/process must fit into the one of the state’s five focus areas • Provide a detailed business plan and an explanation of how funds will be used to further commercialize the product/technology/service (the funds awarded must be matched by the company) • A minimum of seven new full-time jobs must be created. These new jobs must be management level within a high-tech company, “R&D”, or highly technical in nature with an annual salary of at least $40,000 • Company must work with DCI directly or through the ICC/IC network • Kentucky Economic Development Finance Authority reviews / approves awards based on DCI’s recommendation

  10. DCI-Funded Programs Commonwealth Seed Capital, LLC The Kentucky Economic Development Partnership Board established Commonwealth Seed Capital, LLC, to invest state funds in support of seed-stage technology companies in Kentucky CSC primarily participates in seed-stage investment rounds alongside other angel, seed and venture capital investors (who serve as the lead investors) Typical investment size is up to $250,000 per round. CSC also invests differing amounts in other angel, seed or venture capital funds. Company must have the majority of its assets in Kentucky

  11. DCI Initiatives Kentucky Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds Program Kentucky offers the nation’s only SBIR-STTR program that provides matching funds to Federal SBIR/STTR awards – dollar-for-dollar – for both: • Phase 1 awards (matched up to $100,000) • Phase 2 awards (matched up to $500,000) Awards are made on a competitive basis to Kentucky-based companies. Out-of-state companies can qualify if they relocate to Kentucky within 60 days of the execution of the matching grant. Companies must maintain their Kentucky-based status for a minimum of five years. ICC Director must provide letter with application. http://www.thinkkentucky.com/DCI/DCIFunding.aspx

  12. DCI Initiatives Kentucky New Energy Ventures Fund DCI manages (through a contract with the Kentucky Science and Technology Corporation) $5 million in public funds for investment in promising renewable and alternative energy companies in the Commonwealth The funds supports companies developing alternative fuel and/or renewable energy technologies through either: (A) one-time grants of $30,000 or (B) larger equity investments, which have ranged from $250,000 - $750,000 Funds must be matched by the company cash or in-kind as approved by the Fund Manager. http://www.thinkkentucky.com/DCI/DCIFunding.aspx

  13. Kentucky Enterprise Funds (KEF) Kentucky Enterprise Fund Administered by the Kentucky Science and Technology Corporation on behalf of the Council for Postsecondary Education The Kentucky Enterprise Fund provides seed-stage capital to Kentucky-based companies that are commercializing a technology-based product or process. There are two types of awards designed to stimulate private investment in Kentucky-based technology companies with high growth potential. www.startupkentucky.com

  14. Kentucky Enterprise Funds (KEF) continued Kentucky Enterprise Fund awards involve grants of $30,000 and investments up to $750,000 in small and medium-sized Kentucky-based companies for business development activities. Rural Innovation Fund awards involve grants of $30,000 and investments up to $100,000 in small, rural (outside of Fayette and Jefferson Counties), Kentucky-based companies working in partnership with a Kentucky postsecondary institution or unaffiliated third party.

  15. Kentucky Business Investment (KBI) Program Eligible Operations Manufacturing, agribusiness, service/technology, or headquarters (regional and national) related companies locating or expanding in Kentucky. Requires at minimum the creation of 10 full-time Kentucky jobs and certain hourly wage and benefit levels. Inducements in Enhanced Counties For up to 15 years, the company may receive a 100% credit against its state corporate income tax and the company may assess new full-time Kentucky resident employees up to 5% of their gross payroll. Employees offset this with personal state and local income credits equal to the assessment. Inducements in Other Counties For up to 10 years, the company may receive a 100% credit against its state corporate income tax and the company may assess new full-time Kentucky resident employees up to 4% of their gross payroll (requires local participation). Employees offset this with personal state and local income credits equal to the assessment. http://www.thinkkentucky.com/kyedc/pdfs/KBIFactSheet.pdf

  16. Kentucky Business Investment Program

  17. Kentucky Enterprise Initiative Act (KEIA) Eligible Costs A KEIA approved company is eligible to receive a refund of Kentucky’s 6% sales and use tax paid for construction materials, building fixtures, electronic processing equipment, and for equipment used in research and development. The total tax refund incentive available for all projects, for each fiscal year, is limited to $20 million for building and construction materials and $5 million for equipment used for research and development and electronic processing. http://www.thinkkentucky.com/kyedc/pdfs/keia.pdf

  18. State High-Tech Funding In summary: There is a wide range of public funding and business support programs to help Kentucky start-up high-tech companies. From pre-seed, seed and commercialization funds, to tax incentives and other programs, Kentucky has the resources and infrastructure in place to help innovators and entrepreneurs succeed at every stage of growth.

  19. Thank you Warren O. Nash, III 502-564-1910 warren.nash@ky.gov For a copy of this presentation, e-mail donnag.lewis@ky.gov

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