Lexington is indeed beautiful. It's a big city with a small-town feel, from its tree-lined Main Street to the fountains at Thoroughbred Park and Triangle Park. Few buildings here could be considered tall, so you're always aware of the sky above; there's no concrete jungle feeling here. And just blocks out of downtown are neighborhoods of stately 19th-century brick houses with sprawling lawns. Even in the midst of all the fast-food joints and strip malls, there are parks and pieces of green space, and throughout the city, you see numerous trees of beech and buckeye, poplar and pine. As cities go, it's beautiful all right, but, of course, that doesn't mean it's a utopia for all entrepreneurs.
"Unfortunately, Kentucky's economic policy is still [geared] toward recruiting manufacturing and chicken-plucking firms, and cutting ribbons. There's too much emphasis on that, instead of [nourishing] young, growing companies," says Janet Holloway, a business consultant in Lexington and former director of the Small Business Development Center and the Center for Entre-preneurship at the University of Kentucky.
Despite the lack of support, more and more young companies are forming in Lexington, according to Holloway. "They seem to almost be like genies out of the bottle; they burst into reality and grow themselves," she says.
The local government isn't completely falling short, however. It's helping fund Lexington United, a nonprofit group recently created to assist both monolithic corporations and scrappy entrepreneurs with problems such as finding venture capital and decent office space. Meanwhile, the private sector provides valuable resources for entrepreneurs, including the Center for Entrepreneurship at the University of Kentucky and the Kentucky Science and Technology Corp.'s newly formed Science and Technology Center, which encourages the use of technology and science in the economy.
But make no mistake: Lexington's nurturing persona is still in its infancy stage, says Lexington United president Terry Burkhart.
"One thing that puts us at a disadvantage is that Lexington is not like a Portland [Oregon] or Cleveland," says Edelen. "Those cities have made the transition from manufacturing-based economies to high-end, high-tech, new-economy-type communities. Lexington's a bit different because historically we were never a large manufacturing town. Lexington has always been an agricultural town. It has the world's largest burley tobacco market. We have the equine economy, and there are a lot of service jobs here. But we didn't have manufacturing."
That factor, combined with the local government's resistance to urban sprawl, has created strong demand for space in Lexington. As a recent issue of Midwest Real Estate observed, it's tough to get projects approved for new building here. As a result, the downtown corridor is being dusted off. Edelen points to a high-tech incubator setting up shop in an abandoned Woolworth's building and adds that local dotcoms are being encouraged to locate downtown.
Perhaps an even more daunting challenge than finding space for your business is finding investors who can help it grow. "There isn't a significant number of formal venture or equity capital firms in Lexington," admits Laura Tanno Boison, market manager at Bank One in Lexington. On the plus side, she adds, "The angel network in Lexington rivals only the angels in heaven. There are active angels who have made significant contributions in capital and management expertise to entrepreneurs. And Lexington United is working to get a major equity fund started."
The state of Kentucky has also taken steps to attract investors' attention. "About two years ago, we adopted a plan that West Virginia authored," Tanno Boison says. "It's a tax-incentive plan that gives a 40 percent state tax credit to those investing in venture funds that invest in Kentucky-based companies." Tanno Boison can tell success stories of Lexington entrepreneurs who had nothing and now have something. She cites Central Kentucky Research, a 3-year-old firm that provides clinical testing for major pharmaceutical companies. It was started "by two female nurses who wanted more in their lives," says Tanno Boison. "They had no money, no [experience] running a business, no good-old-boy network. They were turned down by banks but finally received traditional financing from Bank One. Now they don't need bank loans; business is that good."
Tanno Boison also tells the story of Junior Johnson, a former college basketball player turned entrepreneur, who owns PurchasePro, a B2B Internet firm. PurchasePro received financing from a number of angel investors, says Tanno Boison, which helped the company go public. Now Johnson is worth about $500 million.
Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.