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High-Tech Funding

Capital is critical to grow the high-tech firms that fuel economic development in the emerging economy. Product development can be expensive and many new firms find it difficult to raise private investment funds. These firms must turn to alternative financing, which is often referred to as "pre-seed" or "seed" funding.

Sources for funding include state and federal programs, and private venture capital companies. There are also many types of financial incentives offered to businesses looking to locate or expand within Kentucky.

State High-Tech Funding Resources

High-Tech Pools

The Cabinet for Economic Development administers the High-Tech Investment Pools that are used to build and promote technology-driven industries and research-intensive industries with the goal of creating clusters of innovation-driven industries in Kentucky. The executive director of the Office of Kentucky Innovation Network recommends to KEDFA, for approval, funds to be used to support loans and grants, or to secure equity or related positions.

Commonwealth Seed Capital

Commonwealth Seed Capital, LLC, (CSC) is an independent fund that makes debt or equity investments in early-stage Kentucky business entities to facilitate the commercialization of innovative ideas and technologies.

Investments are typically made in these specified innovation areas: health and human development; information technology and communications; bioscience; environmental and energy technologies; and materials science and advanced manufacturing.

CSC invests in companies that have a significant Kentucky presence, the prospect for substantial growth, and the potential to generate an appropriate rate of return. For more information, contact:

Gene Fuqua
Commonwealth Seed Capital, LLC

SBIR-STTR Matching Funds Program

The Cabinet will match, on a competitive basis, Phase 1 and Phase 2 federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards received by Kentucky high-tech small businesses and those willing to become Kentucky-based businesses. This includes matching Phase 1 federal awards up to $150,000 to support the exploration of the technical merit or feasibility of an idea or technology, and up to $500,000 of federal Phase 2 awards, which support full-scale research and development. www.ThinkKentucky.com/dci/sbir/sbirsttr.aspx

Kentucky New Energy Ventures Fund

The Kentucky New Energy Ventures Fund (KNEV) provides seed stage capital to support the development and commercialization of alternative fuel and renewable energy products, processes, and services in Kentucky. The KNEV fund makes grants of $30,000 and investments ranging from $250,000 to over $750,000. Qualified companies must be Kentucky-based and funds are to be used for business development activities. For more information and funding guidelines, please visit startups.kstc.com.

Statewide Student Business Plan Competition and Awards Program

The annual “Idea State U” competition for Kentucky’s public university students encourages entrepreneurship and helps identify and support new high-growth ventures in the commonwealth. The winning teams together receive cash prizes and awards totaling $100,000. www.IdeaStateU.com

Kentucky Innovation Network Center Program

The Kentucky Innovation Network is a statewide program of regional Kentucky Innovation Network (ICCs) and satellite offices that together provide a cohesive resource offering free business-building services and assistance in obtaining funding. The Cabinet manages the network of ten ICCs and three satellite offices, which together serve every county in Kentucky. See www.KYInnovation.com to locate the offices serving each region.

Kentucky Enterprise Fund

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

  1. 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.
  2. 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.
Kentucky Science and Engineering Foundation Awards

Small companies having their principal place of business located in Kentucky are eligible to apply for the Foundation’s R&D Excellence program awards under the "emerging technologies" category, with awards ranging from $20,000 to $50,000 per year (up to $100,000 for two years). Emerging technologies are the subject of research and development activities, which are conducted to help the company further define and develop a new product or process technology. For more information and funding guidelines, please visit ksef.kstc.com.

Kentucky Commercialization Fund Program

The Foundation also administers the Kentucky Commercialization Fund program, which provides seed funds to Kentucky university’s faculty members for commercializing products, processes, or services developed through research and development work undertaken at a Kentucky university, with awards not exceeding $75,000 each year (up to a maximum of $150,000 over two years). For more information and funding guidelines, please visit ksef.kstc.com.

Research Facilities State Income Tax Credit

A state income tax credit is provided for investment in facilities used to pursue research. The income tax credit is equal to 5 percent of the qualified cost for "construction of research facilities" for "qualified research" as defined in Internal Revenue Code Section 41. The credit is available to new and existing businesses that construct, remodel, expand, or equip research facilities, but does not include replacement property. Any unused credit may be carried forward for 10 years.

Federal High-Tech Funding Resources

Small Business

The federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are part of an annual $2 Billion competitive three-phase award system that provides qualified small business concerns with opportunities to propose innovative ideas that meet the specific research and development needs of the federal government. www.sbir.gov

Government Science and Technology Websites

The federal government provides scientists, engineers, and technologists with easy, one-stop access to key U.S. Government web resources. Thousands of websites are reviewed to select just those sites that provide valuable links to government expertise, services, laboratories, information centers, and other important resources www.Grants.gov.



Kentucky Cabinet for Economic Development   Old Capitol Annex  300 West Broadway   Frankfort, KY 40601
502-564-7140 (local)   800-626-2930 (toll free)