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Kentucky Innovation Act

Board of Directors Center for Renewable Energy Research & Environmental Stewardship (CRERES) Presentation March 30, 2010 Presented by Deborah L. Clayton Commissioner Dept. of Commercialization & Innovation. Kentucky Innovation Act. House Bill 572 – 2000 KY General Assembly

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Kentucky Innovation Act

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  1. Board of DirectorsCenter for Renewable Energy Research & Environmental Stewardship(CRERES)Presentation March 30, 2010Presented byDeborah L. ClaytonCommissionerDept. of Commercialization & Innovation

  2. Kentucky Innovation Act House Bill 572 – 2000 KY General Assembly • Promote applied research in postsecondary institutions • Encourage business innovation • Attract high-tech enterprises to Kentucky • Advance higher-order skills of an educated workforce • Establish Department of Commercialization and Innovation (DCI), Cabinet for Economic Development • Innovation and Commercialization Center Program

  3. Facilitating a New Economy Knowledge Creation (Innovation) Business & Job Creation Business Growth & Wealth Creation Commercialization Revenue Investment DCI Overall Role Help inventors/entrepreneurs commercialize technology Attract and retain highly educated people (Kentuckians and others) Generating higher salaried jobs Help Kentucky attract high-tech entrepreneurs and businesses

  4. Technology Focus Areas Five technology “focus” areas: • Human Health and Development • Information Technology and Communications • Biosciences • Energy and Environmental technologies • Materials Science and Advanced Manufacturing (Nanoscience and nanotechnology are cross-cutting)

  5. DCI-Managed Funding High-Tech Pools DCI manages high-tech pool funds: Used for projects that create high-tech jobs and knowledge-based companies with the goal of creating clusters of innovation-driven industries in Kentucky. The commissioner recommends funding of companies to Kentucky Economic Development Finance Authority (KEDFA) for approval.

  6. DCI-Managed Funding High-Tech Pool Cumulative Jobs Created 2006-2010 Projected Jobs Active / Monitored Companies: 40Total Awarded: $15,429,528Projected High-tech Jobs: 871 Average Salary: $64,004 Average Investment Per Job: $17,714 Projected annual payroll: $55,7470,746 Projected annual payroll tax revenue: $ 3,344,865 Years to recover investment per job: 4.6

  7. DCI-Funded Programs Innovation and Commercialization Center Program The Innovation and Commercialization Center Program is authorized by KRS 154.12-305 for the purposes of creating “… products, new companies, and value-added jobs in communities throughout the Commonwealth.”

  8. DCI-Funded Programs Innovation & Commercialization Center Program Supports start-up and existing high-tech companies through the concept and development phases, including: • Market research • Prototype development • Business plan and strategies development • Grant and contract capabilities • Capital and management resource identification Program managed by DCI and administered under contract to DCI by the Kentucky Science& Technology Corporation.

  9. DCI-Funded ICC-IC Program Innovation and Commercialization Center Program Results Kentucky achieves positive ROI in under 16 months based on FY2009 DCI investment in program of $2,194,500 and annual payroll tax revenue of $1,693,580.

  10. DCI-Funded Programs Commonwealth Seed Capital, LLC The Kentucky Economic Development Partnership Board established Commonwealth Seed Capital, LLC, to invest state funds in support of seed-stage technology companies in Kentucky. CSC primarily participates in seed-stage investment rounds alongside other angel, seed and venture capital investors (who serve as the lead investors) Typical investment size is up to $250,000 per round. CSC also invests differing amounts in other angel, seed or venture capital funds Company must have the majority of its assets in Kentucky

  11. DCI-Funded Programs • Commonwealth Seed Capital results • Since June 2001: • Direct investments have been made in 14 seed-stage companies • There have been 8 fund-of-fund investment commitments • Over 250 high-tech, high-wage jobs have been created

  12. DCI Initiatives Kentucky Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds Program Kentucky offers nation’s only SBIR-STTR program that provides matching funds for both: • Phase 1 awards (matched up to $100,000) • Phase 2 awards (matched up to $500,000) for up to 2 years Limited to Kentucky-based companies. Out-of-state companies can qualify if they relocate to Kentucky within 60 days. Companies must maintain their Kentucky-based status for a minimum of five years. ICC Director must provide letter with application.

  13. DCI-Managed Funding SBIR-STTR Matching Funds Program Through five rounds of funding: • 80 awards to 46 high-tech companies  • Over $17.7 million awarded • Over $30 million in federal funds leveraged • 8 high-tech firms moved here for program: Relocated to KentuckyFrom Advanced Dynamics                 UT Transposagen Biopharma     PA NeoCytex Biopharma              FL Turbo Wheelchairs                SC Bexion Pharmaceuticals          OH 3H Company    VA ATI WV Louisville Bioscience OR

  14. DCI Initiatives Annual BIO International Conference NOW Since 2005 . . . Original state tradeshow booth replaced with custom-designed State Pavilion featuring individual stations and graphics for exhibitors. 1,600 sq. ft. space has 8X the usable space of 2005 booth. THEN

  15. DCI Initiatives Kentucky New Energy Ventures Fund DCI manages $5 million in public funds for investment in promising renewable and alternative energy companies in the commonwealth Created under “Kentucky Alternative Fuel and Renewable Energy Fund Program” to support companies developing alternative fuel and/or renewable energy technologies. Part of the $100 million Kentucky Energy Independence Act. The fund provides either: (A) one-time grants of $30,000 OR (B) larger equity investments, which have ranged from $250,000 - $750,000 Must be matched dollar-for-dollar by the company

  16. DCI-Managed Funding • Kentucky New Energy Ventures Fund • 25 Kentucky companies awarded over $2.85 million • Leveraged over $9 million in private investment by the awardees • 14 companies are developing biofuels technologies • 4       “              “           “         wind energy technologies • 1       “              “           “         clean coal technologies • 2       “              “           “           solar technologies • 2       “              “           “         alternative energy • 2 “ “ “ natural gas technologies • 17 of 25 awards went to rural counties (outside of Fayette and Jefferson counties)

  17. Integrating Efforts DCI funds and otherwise supports efforts by Kentucky education and workforce development agencies

  18. DCI Initiatives Business Plan/Concept Competition One of the nation’s top state-sponsored business plan competitions with $100,000 in available prizes and awards. Third competition to be held April 16-17, 2010. Up to 32 teams compete from Kentucky’s public universities.

  19. DCI Initiatives Examples of Winning Business Plan Competition Teams Partum GroupCompleted the first round of clinical studies on patented medical device in 2009 Packstream Has started acquiring customers for its system that prints personalized ads on retailers’ shipping packages. Audio Eyez Handheld device and mapping system to assist vision-impaired persons in public spaces Fenix Group Proprietary nodule detection software enables spotting lung cancer from scans 3-6 months sooner

  20. DCI Initiatives Kentucky Dataseam PARTNERS: Cabinet for Economic Development, James Graham Brown Cancer Center, Apple Computer, and the University of Louisville Has placed over 10,000 computers in school districts in Kentucky. 14 research teams have used idle capacity of student computers to investigate over 100 cancer targets. Has reduced data processing jobs that used to take 50 years of CPU time down to 20 days to speed up drug discovery research efforts.

  21. DCI Supports Other Initiatives National Governor’s Association Policy Academy Kentucky worked with nationally recognized experts to identify economic policies to improve our economic competitiveness in the global economy. WIRED I-65 Corridor Grant Initiative to unify 19 Kentucky counties and Louisville along the I-65 corridor as a single economic region to address work-force development efforts. Idea Festival Unique event attracts world’s leading-edge thinkers Kentucky BioAlliance DCI created Kentucky’s state biotech advocacy organization

  22. DCI Supports Other Initiatives E-Health Network Board DCI heads Economic Development Subcommittee STEM Education Workgroup DCI is co-chair as state implements Project Lead the Way Broadband Recovery Act Committee Previously funded ConnectKentucky broadband roll-out

  23. Signs of Progress Report: “2008 State New Economy Index” KY 2008 Rank(2007 rank) IT jobs in non-IT industries 33rd (42 in 2002) (up 9 places; 3rd fastest rate of increase in nation) Globalization 9th (10) (amount of exports and workers employed by foreign cos.) Entrepreneurs starting new businesses25th (42) (up 17 places; 4th fastest rate of increase in nation) e-Government 2nd (11) (allowing people to go online to access gov’t services) Foreign direct investment9th (12) (investing in new U.S. facilities employing U.S. workers) Patents 39th (43) Venture Capital 22nd (36) Innovation Capacity 43rd (47) (Combines high-tech jobs, patents, R&D $, VC $, etc.) Source: Kauffman / ITIF November 2008 (most recent)

  24. Thank you Deborah Clayton 502-564-7670 Deborah.Clayton@ky.gov For a copy of this presentation, e-mail cheryl.sutherland@ky.gov

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