Twelve years ago, when Brian Raney was starting his first software company, Lexington was a lonely place for a new entrepreneur.
Finding the available resources and making the right connections in the community were difficult, he said, and that made the already challenging process of launching a startup even more intimidating.
Brian Raney
But that struggle, and his desire to pave an easier road for the next wave of local entrepreneurs, inspired him to become co-founder of the downtown incubator and high-tech business hub Awesome Inc, along with its not-for-profit arm, the Awesome Center for Entrepreneurship (ACE). Raney, along with a host of government, education and business partners, has since worked to build an interwoven network of entrepreneurial inspiration, guidance, aid and resources in Central Kentucky for aspiring startups. In October, that local effort got a significant boost from the Cabinet for Economic Development’s KY Innovation office, as the agency announced plans to inject $750,000 into a new Bluegrass partnership led by ACE to boost entrepreneurial growth in the region. The investment will be matched dollar for dollar by partnering local groups.
“The state is investing in the Lexington entrepreneurial ecosystem at a rate that is five-fold what has been invested annually in the past.” — KY Innovation Director Brian Mefford
“We believe that Lexington and the Bluegrass region are on the cusp of unprecedented growth,” said KY Innovation director Brian Mefford, in announcing the new partnership at Lexington’s annual SPARK celebration of local entrepreneurs in October. “The state is investing in the Lexington entrepreneurial ecosystem at a rate that is five-fold what has been invested annually in the past.”
Lex Give First
The regional consortium, which encompasses the Bluegrass Business Development Partnership (BBDP), the University of Kentucky’s Office of Technology Commercialization, Commerce Lexington, Inc., the Bluegrass Angels, the Governor’s School for Entrepreneurs, Inventors Network KY and others, is the second of KY Innovation’s newly formed Regional Innovation for Startups and Entrepreneurs (RISE) partnerships to be rolled out in the state.
The Awesome Center for Entrepreneurship, the not-for-profit extension of Awesome Inc, will lead a local partnership funded in part by a new state grant to promote entrepreneurial activity.
In an effort to reinvent its approach to investments in Kentucky startups, the state asked regional groups to submit their own RISE proposals for how to best encourage local entrepreneurial growth. Lexington’s successful proposal, dubbed the “Lex Give First” project, aimed to leverage and strengthen existing collaborative initiatives and a community wide contributive spirit toward the cause.
“We want to have a ‘give before you get’ mentality,” Raney said. “I think that’s one of the great strengths of Lexington’s entrepreneurial community.”
That generous, cooperative spirit creates the kind of fertile ecosystem where new opportunities can take root and grow into mutually beneficial relationships, according to project partners.
The additional funding from the state will enable both ACE and the University of Kentucky’s existing entrepreneurship program to add new staff. Much of the partnership’s work will focus on enhancing and expanding existing programs, Raney said, including community training and networking events, pitch competitions, entrepreneurial workshops, consulting help and early stage mentoring support.
The partnership will also enable the team to explore new opportunities and engage with more segments of the community. Raney plans to increase outreach and education efforts on entrepreneurism in K-12 education in Central Kentucky, and he also hopes to build even closer ties in coming years with the area’s corporate sector.
“We’re going to be developing some programs to engage corporate executives across the region,” Raney said. “We feel there’s a real opportunity to leverage some of the medium to large-sized businesses and to get them engaged in the entrepreneurial community.”
They are also conducting research into a possible Lexington innovation center, which could be created in partnership with UK to house multiple resourcesand services for local entrepreneurs in one place, Raney said.
Tight-knit network
While the University of Kentucky is already closely aligned and integrated with the local entrepreneurial community, the newly invigorated partnership will help to ensure that guidance and necessary resources can move seamlessly in both directions, said Ian McClure, director of UK’s Office of Technology Commercialization.
“At the core of every successful innovation and entrepreneurial ecosystem, you have universities and research institutions. But both sides have resources to give to each other, and that’s what we are trying to capitalize on here,” McClure said. “It’s a two-way channel. At UK, we have start-ups that need the resources of Lexington and the state. Likewise, the state and Lexington’s entrepreneurship community can benefit from the resources, the prolific minds, the facilities, and the technologies that incubate and come out of the campus.”
The contributions of key agencies and early advocates for entrepreneurship in Lexington are already producing results, said David Goodnight, leader and fund manager of Lexington’s Bluegrass Angels investor group. The Bluegrass has upped its game significantly in recent years, Goodnight said, both in terms of the sophistication of business services available to support start-ups and the quality of the entrepreneurs bringing their ideas to the table.
“I would say that half of the companies that we have invested in [in the Bluegrass Angels’ Fund III] are change-the-world types of technologies,” Goodnight said.
Kentucky is well-positioned when those ideas come its way, Goodnight added. On the East Coast and the West Coast, where new ideas can be chased by too much capital, the valuation of promising start-ups can be significantly inflated, and the potential for failure is high. In Kentucky, the valuations are more reasonable, Goodnight said.
“You’ve got kind of an ideal climate to have these world-changing ideas come to market,” Goodnight said. “People around the nation recognize that, and that’s why they are syndicating with us when we lead these deals.”
The Bluegrass Angels recently raised $6 million for its next fund, attracting more than 70 investors from across the state, Goodnight said. More than half of those investors are new to the Bluegrass Angels, he added, and they demonstrate the same give-first mentality that Lexington’s RISE partnership hopes to emphasize.
“These [investors] are all people who believe even more in the value of entrepreneurship and successful companies than they believe in the long-term return of this fund,” Goodnight said. “And success is building upon success. More entrepreneurs are stepping into the game, willing to take the risk.”