Kentucky’s Rural Innovation and Entrepreneurship Program: An In-Depth Look at How It Works

by Cheryl Stone and Mel White, Eastern Kentucky University Center for Economic Development, Entrepreneurship and Technology

During the 2000 session of the General Assembly, the Kentucky legislature passed House Bill 572, the Kentucky Innovation Act. This act created a statewide system to support “new economy” business development, including rural entrepreneurship and private equity education and formation. After five years, these new economy programs have linked collaborative resources to foster research and development, commercialization funding and infrastructure development, along with technical assistance and support.

Eastern Kentucky is a region of great scenic beauty in the Appalachians, but also encompasses 46 economically distressed counties.

But most importantly, the programs have focused on new economy business development by seeding and supporting entrepreneurs in areas such as life sciences, homeland security technology, software development, and innovative patented products. The overall implementation of the state’s new economy programming is based on a regional strategic planning process. The Kentucky Department of Innovation and Commercialization for a Knowledge-Based Economy, formerly the Office of the New Economy, oversees all new economy programs.

In eastern Kentucky, a region encompassing 46 rural, economically distressed counties and roughly 40 percent of the state’s geography, the Center for Economic Development, Entrepreneurship and Technology (CEDET) serves as the area headquarters for the new economy programs. CEDET is an EDA University Center located on Eastern Kentucky University’s main campus in Richmond. The CEDET office manages the Eastern Innovation Region and its four regional Innovation Centers, as well as one of six Innovation and Commercialization Centers (ICCs) throughout the state.

The ICC is a program administered by The Innovation Group, an initiative of the Kentucky Science and Technology Corporation (KSTC). Supporting the ICC in eastern Kentucky are regional Innovation Centers in Ashland, Pikeville, Paintsville and West Liberty, which operate through partnership contracts with other institutions of higher education. The regional Innovation Centers serve as a feeder system to the ICCs by working to develop new businesses and new economy capacity, supporting entrepreneurship education, serving as technology resources, and contributing to each educational institution’s capacity and economic development mission.

In Kentucky, fostering rural new economy entrepreneurship is collaborative process. In the first step, entrepreneurs receive basic assistance tailored to their needs through the Innovation Centers, which help both startup and existing businesses by providing comprehensive entrepreneurship training, mentoring, access to capital and networking. (A total of 15 regional Innovation Centers are planned eventually to serve non-urban regions of the state.)

In the next step, the ICC program takes growth-ready businesses through a protocol that prepares them for venture capital funding. The ICC evaluates their potential and tailors a process to meet their needs, which may include detailed business plan reviews, comprehensive market assessments, valuation guidance and investor pitch critiques.

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