Which Kentucky cities are among nation’s best places for startups? You may be surprised

Lexington entrepreneur Josh Sizemore recently launched his startup company, Unify Water, a spring water brand. New Census data showed that Elizabethtown, Bowling Green and Lexington were among the top 20 cities in the nation for startup companies between 2009 and 2014. Tom Eblen teblen@herald-leader.com

BY TOM EBLEN

The popular data analysis blog FiveThirtyEight.com recently wrote about St. Louis being the nation’s entrepreneurial hotspot. New Census data ranked it second among U.S. cities for growth in the percentage of businesses less than a year old.

But what caught the attention of many Kentuckians was this: Elizabethtown came in first. Bowling Green was №3. Lexington was №14.

“The state has been plugging along under the radar for years, but all the pieces are starting to connect,” said Warren Nash, executive director of the Von Allmen Center for Entrepreneurship at the University of Kentucky’s Gatton College of Business.

St. Louis had some impressive big-city numbers: 4,876 startup businesses in 2014. They were 9.7 percent of all St. Louis businesses and represented a 3 percent increase since 2009. The Kentucky numbers were smaller, but impressive for their size.

Elizabethtown had 179 startups in 2014, representing 9 percent of all businesses and a growth rate since 2009 of 4.3 percent. Bowling Green had 217 startups, or 9.1 percent, and a 2.5 percent growth rate over those five years. Lexington had 681 startups, representing 7.5 percent of all businesses and a growth rate of 1.1 percent.

Nash attributes much of the success to an emphasis on entrepreneurship that began within state government and the University of Kentucky late in the 20th century.

“We made these early investments and it’s starting to pay off,” he said. “It takes patience and an infrastructure willing to help these folks succeed.”

The Kentucky Science and Technology Corp. was started in 1987. Then, former UK President Lee Todd, himself a technology entrepreneur, pushed the university to become a bigger player in technology commercialization and business development. Other state universities started programs in their regions.

The Kentucky Innovation Act of 2000 created the Kentucky Innovation Network, a network of 12 offices across the state to jump-start home-grown businesses. They have worked with Small Business Development Centers, chambers of commerce and other local partners to mentor entrepreneurs and help them find capital, with an emphasis on companies that are “scalable” and make use of technology.

The network claims it has assisted in the creation of 1,300 companies and 6,500 jobs. It has helped companies raise $785 million in capital, with an increasing amount coming from 14 investment or “angel” groups and six venture capital funds created by investors across the state.

“It’s not just writing a check; it’s mentoring these folks,” said Nash, noting that many local investors have been successful entrepreneurs.

In Lexington, the Kentucky Innovation Network, the Small Business Development Center and Commerce Lexington work together to provide a “one-stop shop” for entrepreneurs. On Oct. 14, they will host the Kentucky Angel Investor and Entrepreneur Summit. For more information or to register, go to: Sparklex.org.

Lexington startups have had a heavy technology focus, from developers of computer software and mobile apps to health care and pharmaceuticals. The city has become a hot spot for video game development, with startup companies including Super Soul, Frogdiceand RalphVR.

Bowling Green’s entrepreneurial push started 12 years ago when Western Kentucky University and the Kentucky Innovation Network opened the Small Business Accelerator in a former shopping mall. One of its first clients was Bluegrass Supply Chain Services, a logistics company formed in 2002 that now has several hundred employees.

“Our focus is building a value proposition that supports a wide variety of startups,” said Jeff Hook, the network director in Bowling Green.

Elizabethtown’s network office has worked with a wide variety of entrepreneurs, from software developers to mushroom farmers, said Lisa Williams, the director. Many entrepreneurs are retired military people from nearby Fort Knox.

“What we were tasked to do was create a culture of entrepreneurism,” Williams said, adding that many of those new companies have helped revitalize a downtown district that had declined in previous decades.

One startup now doing especially well is Schedule It, which makes scheduling software for insurance adjusters and now employs about 25 people. It was started by insurance adjuster Rebecca Wheeling.

Elizabethtown’s biggest success story is iPay Technologies, an online bill payment company that Mike and Dana Bowers started in 2001 and sold in 2010 for $300 million to Jack Henry & Associates. The company remained in Elizabethtown and the Bowers now serve as mentors for other local entrepreneurs.

The network’s Elizabethtown office has a monthly networking event for entrepreneurs and potential investors called Startup Garden. The speaker at the next event Oct. 4 is Bobbie Watts, founder of USA Bridal, an Elizabethtown bridal shop that now has an online business and stores in Louisville, Nashville and Evansville, Ind.

“Entrepreneurial ideas have been in Kentucky all along; the key is creating the environment for them to take place,” Nash said. “Who knows what we’re going to look like when you take the next five-year snapshot.”