Roughly 150 startup business owners and investors gathered Friday at the SPARK Angel Investors Summit to connect and share knowledge about the region’s developing ecosystem of entrepreneurial activity.
That ecosystem – along with the businesses, jobs and investment that it supports – is fundamental for the economy of the commonwealth, keynote speaker David Goodnight told summit participants in his lunchtime address, and growth entrepreneurship is gaining ground in Kentucky.
Goodnight, leader and fund manager of Lexington’s Bluegrass Angels investor group, pointed out that Kentucky’s ranking on the Kauffman Index for growth entrepreneurship jumped from 21st to 14th among the nation’s 25 smaller states between 2016 and 2017, indicating the state is headed in the right direction.
“The ecosystem in Kentucky is working, and it’s working well and it’s building momentum,” said Goodnight, who is also an adjunct professor in entrepreneurship at the University of Kentucky's Gatton College of Business and Economics. “We have more companies forming, we have more capital coming in, and we have more young entrepreneurs participating in what we do.”
The Bluegrass Angels, which provides early-stage seed funding and venture capital equity to start-up and expanding companies in Kentucky, has invested in 47 companies since its founding in 2004, and 75 percent of those enterprises are either still in business or have had an exit, such as a successful acquisition, Goodnight said.
He shared the experience of one such Bluegrass Angels-supported venture, Smart Farm Systems, Inc., a producer of irrigation monitoring and control systems for medium- and large-scale farming operations, to illustrate the group’s process in helping to grow and support Kentucky startups. Smart Farm released its product in 2017 and underwent its fourth round of funding in 2018. Dealers signed $1 million in orders in the first 12 months after the company’s product release, Goodnight said.
Founded in 2004, the Bluegrass Angels investor group now includes 80 members, having doubled its membership in the past three years, Goodnight said. The group’s $6 million Fund IV is targeted for completion in 2018, he added, and it will be a joint effort of the Bluegrass Angels and the Louisville-based Enterprise Angels, which will team up to serve as the state’s largest angel investment firm.
The annually held SPARK Angel Investor Summit is organized through a partnership of Commerce Lexington Inc. and the Lexington Innovation Office of the University of Kentucky’s Von Allmen Center for Entrepreneurship, a part of the Gatton College. In addition to Goodnight’s keynote address, the event featured multiple panel discussions, including a morning session moderated by Awesome Inc. CEO Brian Raney on the role of accelerator programs and university-based entrepreneurship programs in helping to develop new ideas into investment-ready startups. Additional sessions included a mock fund manager session to share insight on investors’ decision-making processes, and an update on government support and legislative changes from Brian Mefford, executive director of KY Innovation, the Office of Entrepreneurship at the Kentucky Cabinet for Economic Development.
Local start-ups from throughout Kentucky participated in the summit, presenting pitches for their companies throughout the day and sharing their concepts through expo booths lining the event.
Kevin Croce, CEO of the Lexington-based start-up MedMyne, said building a health tech business like his in Kentucky can be challenging, because the state isn’t traditionally considered a technology hub. But that culture is starting to change, Croce said.
MedMyne, originally formed in 2014, was started by three Kentucky radiologist who saw the need for better cancer screening management platforms that could help health professionals improve both business outcomes and quality of care. The company’s LungMyne platform for lung cancer screenings was born in 2016 and is currently used in three hospitals, Croce said. Its first client has increased the volume of its lung cancer screening activities by more than 400 percent in one year, Croce said, and the hospital’s efficiency has also increased, with the time required to track and submit screening data reduced from 20 minutes to roughly two minutes per patient.
The company has completed a seed round of investment and is currently undergoing its Series A funding round, led by the Bluegrass Angels, said Croce, who added that the company is committed to growing in Kentucky.
“Why not Lexington? Why not Kentucky? Why can’t this be a new tech hub for start-ups and innovation?” Croce said. “We always ask, why not here? And that’s been a motivation to start the company here, keep it here, and utilize all the resources that we have available to us here.”
Bringing together regional investors, startup companies and government officials to network and share best practices is an important exercise for continued progress in the local and regional entrepreneurial community, said Eric Hartman, director of the UK Lexington Innovation Office and a SPARK Summit organizer.
“The panel content has just been incredible. They’ve done an amazing job of sharing actionable information that entrepreneurs need to know,” Hartman said. “Everybody is coming from a different perspective, and often we find out that those perspectives are different too late. An event like this lets you have those informal conversations to start tuning in to those different perspectives earlier.”
Commerce Lexington president and CEO Bob Quick said budding entrepreneurs often face similar challenges, and events like the SPARK summit allow them to network and share their experiences as they learn from each other. It also equips them with information about available resources and government issues, so they can help to build more opportunities for the industry.
“It’s so easy when you start a business, whether it’s a traditional business or a tech start-up, to become isolated,” Quick said. “The more you interact in events like this, the more you find people you have connections with, who can help you with your business, and whom you can help with theirs.”
SPARK programs are supported by sponsorships from 13 local businesses and organizations. This year's SPARK programs were sponsored by 13 local businesses and organizations, including Bingham Greenebaum Doll LLP, Bluegrass Angels, Chase Bank, UK Coldstream Research Campus, Commonwealth Seed Capital, D3 Investments, Dean Dorton Allen Ford PLLC, Kentucky Highlands Innovation Center, Kentucky Science and Technology Corporation, King & Schickli PLLC, Stoll Keenon Ogden PLLC, Think Kentucky (Kentucky Cabinet for Economic Development) and xMINIMUS.