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.
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 Innovation and Commercialization recommends to KEDFA, for approval, funds to be used to support
loans and grants, or to secure equity or related positions.
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:
Commonwealth Seed Capital, LLC
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.
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
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.
The Kentucky Innovation Network is a statewide program of regional Innovation and Commercialization Centers (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.
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.
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
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
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.
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.
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