Capacity for Innovation

Lexington is an ideal destination for entrepreneurs, innovators, dreamers, and disruptors. Anchored by the state's flagship, research university, the University of Kentucky, and fueled by a highly educated and affordable workforce, the Bluegrass Region's entrepreneurial ecosystem is equipped with all of the resources that help startups succeed. 

According to StatsAmerica’s Innovation Index 2.0, the Lexington-Fayette Metropolitan Statistical Area (MSA) is the state leader in innovation and entrepreneurship. StatsAmerica’s Innovation Index 2.0 quantifies a county, MSA, or Economic Development District’s capacity for innovation and the amount of innovation already produced. The Lexington-Fayette MSA has the highest overall index score in the state with 111.1, compared to Louisville/Jefferson County KY-IN MSA’s 103.8 and Cincinnati OH-KY-IN MSA’s 110.5.

While there are many factors that have contributed to Lexington’s impressive score, none is more apparent than the city’s highly educated workforce. The MSA’s index for Human Capital & Knowledge Creation far exceeded all other categories with 129.5, nearly 30 points higher than the U.S. metropolitan average and the highest result for all Kentucky metros. Lexington’s index is followed by Cincinnati and Clarksville metros with 122.6 and 106.2 respectively. According to 2017 Census Bureau data, 90.5% of Fayette County’s residents are high school graduates or higher, 41.8% have at least a bachelor’s degree, and 18% have graduate or professional degrees. Among cities with populations of at least 300,000, Lexington ranks 7th for high school graduates or greater, 14th for bachelor’s degree or higher, and 11th for graduate/professional degrees. See the table and map below for more details.



A dollar in Lexington goes way farther than in Silicon Valley. Tech entrepreneur, Bob Moore, explored this concept in detail and calls it Venture Capital (VC) Arbitrage. VC Arbitrage is an approach to venture capital fundraising that involves raising funds from cities, like San Francisco and San Jose, where the benchmark for investments is the highest and spending those funds in a market where the inputs necessary for startup creation and growth are lower. According to the VC Arbitrage tool, raising $1,000,000 in San Francisco will buy $1,544,095 of inputs in Lexington, giving each dollar 1.54 times the purchasing power. For more information on how entrepreneurs can make the most of their capital in Lexington, visit the Locate in Lexington Blog.

Source: “Starting a Company Outside Silicon Valley Just Saved Me $1.1 Million.” Crossbeam Blog, 23 Jan. 2019,; Purchasing Power Calculator,, 23 Jan. 2019.

Kentucky SBIR/STTR Matching Program

Arguably, the most unique advantage companies relocating to Kentucky can receive is through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Matching Funds Programs. These programs allow high-tech companies the opportunity to as much as double the funds they receive through the federal SBIR/STTR grant programs by getting a dollar-for-dollar match from the Kentucky Cabinet for Economic Development.

Lexington's Thriving Entrepreneurial Ecosystem

The phrase “entrepreneurial ecosystem” is thrown around often and is used to describe places that encourage and enable entrepreneurs to learn, lead, grow, create, and impact their local communities and beyond. Pulled from biology, the term is fit for entrepreneurs because their community can provide needed resources that help them to thrive. Lexington has solidified itself as one of the U.S.’s top “entrepreneurial ecosystems”. 

Lexington contains every piece necessary for a strong entrepreneurial ecosystem.

  • StartupLEX is an entrepreneur-focused community made for encouraging growth, education, and giving first. The non-profit is an on-ramp for entrepreneurs and startups new to Lexington. Visit their website to subscribe to entrepreneurial newsletters, find out about upcoming events in the area, and join the StartupLEX Slack channel. StartupLEX is the first stop for any innovators new to the Lexington ecosystem.
  • Awesome Inc, Base110, and Base 163 provide spaces for innovators to create and collaborate, while also hosting educational and social events focused on connecting and equipping Lexington’s emerging businesses.

  • Awesome Inc runs the Awesome Fellowship, “a mentor-driven program designed to accelerate your high-tech startup”3.

  • The University of Kentucky Von Allmen Center for Entrepreneurship (VACE) manages the Entrepreneurs Bootcamp, a program for creative and collaborative entrepreneurial learning, growth, and innovation.

  • The University of Kentucky Office of Technology Commercialization (OTC) helps transform the ideas of UK’s best and brightest into commercialized products and services and works with Lexington community entrepreneurs to advance innovation that matters.

  • The University of Kentucky Advanced Science & Technology Commercialization Center (ASTeCC) is an entrepreneurial incubator that fosters growth in early-stage, high-tech, startup companies.

  • The University of Kentucky Coldstream Research Campus is a premier business location for highly innovative and creative companies seeking to leverage Lexington’s excellent high-tech and higher education resources.

  • SPARK, an initiative led by the University of Kentucky Office of Technology Commercialization (OTC) and Commerce Lexington Inc., hosts forums and events throughout the year that network entrepreneurs to funding groups and other helpful resources.

  • The Bluegrass Business Development Partnership (BBDP) is a one-stop shop for small businesses and entrepreneurs that can meet all their business development needs in one place.

  • The state of Kentucky’s entrepreneurial development arm, KY Innovation, created the Regional Innovation for Startups and Entrepreneurs (RISE) partnership as an effort to support high-tech and high-growth potential businesses, this includes $750,000 in state funding for the Central Kentucky partnership.

  • The Bluegrass Angels and the Kentucky Angel Investor Network exist to encourage the growth and development of start-up companies, connect entrepreneurs to passionate and experienced investors, and provide much needed capital.

Each of these key players, and many more, play an important role in making sure Lexington’s entrepreneurs thrive.

For more details on Lexington's entrepreneurial ecosystem and its economic impact, visit the Locate in Lexington Blog.