In April 2024, BE NKY Growth Partnership released “Navigating Change and Charting a Course to a More Competitive Northern Kentucky,” which identified five critical needs integral to maintaining Northern Kentucky’s economic competitiveness.
One of these five needs included “leveraging entrepreneurship as an economic development driver to diversify the economy while building greater regional wealth.”
The recent grand opening of SparkHaus, Northern Kentucky’s new hub for innovation, solidified the Northern Kentucky region’s commitment to leveraging entrepreneurship, and this is just the first step of many in supporting the region’s entrepreneurial ecosystem.
To evaluate the current ecosystem and its economic impact on the region, BE NKY, the economic development company for Boone, Kenton, and Campbell counties, in partnership with Blue North, the Kentucky Innovation Hub for Northern Kentucky, commissioned an analysis by the economic and community development consulting company TPMA, which was released Tuesday at BE NKY’s Q3 Economic Development briefing.
“BE NKY Growth Partnership consistently takes steps to supply important data to the Northern Kentucky community so leaders can make informed decisions about their businesses, organizations, and community involvement,” said BE NKY President & CEO Lee Crume. “As an investor in Blue North, we wanted to provide a comprehensive look into the region’s entrepreneurial environment through this study with TPMA, and we look forward to working with these startup companies as they grow and expand in the future.”
Four types of businesses were analyzed through this study: venture capital-backed, high-growth, new, and main street.
Main street businesses are defined as those that are over five years old and have 50 or fewer employees. New businesses also have 50 or fewer employees but are less than five years old. Venture capital-backed businesses include accelerator/incubator-backed and those that seek growth over profit to display traction and demand. High-growth businesses are those that have seen significant gains in revenue year-over-year for the last three to five years.
Annually, the 1,870 identified businesses that fall into these categories generate more than $7 billion in earnings and nearly $800 million in state income taxes and total taxes on production and imports at the local, state and federal level.
The largest contribution to this overall economic impact comes from 133 high-growth companies. Some examples include Red Hawk Technologies, Motus Freight, and Prolocity.
High-growth businesses have an outsized impact on the region, employing just over 51,000 people (initial employees) and supporting almost 19,000 direct and indirect jobs and a further 17,559 induced jobs.
Direct and indirect jobs are those in the supply chain of venture capital-backed, high-growth, new, and main street businesses. When initial, direct and indirect employees spend their wages in a community, they support induced jobs. High-growth companies generate $6.58 billion in annual earnings.
“High-growth businesses are the backbone of Northern Kentucky’s economy, accounting for, or supporting, nearly 40% of the region’s job force,” said Blue North Executive Director Dave Knox. “I am proud that this study emphasizes the high return on investment that is created when we support entrepreneurs and startups in our region, and it lays the groundwork for future investment.”
High-growth companies also contribute significantly to the region’s tax revenue. The annual impact of taxes on production and imports amounts to nearly $533.5 million, and annual income tax generation is estimated to be between $138 million and $184 million.
Although they have a smaller impact compared to their high-growth counterparts, venture capital-backed, main street and new businesses all also contribute significantly to the economy. In Northern Kentucky, 56 venture capital-backed companies annually generate $158.5 million in earnings, 484 new businesses generate $212.7 million, and 1,197 main street businesses generate $439.2 million.
In addition, main street businesses, which residents rely on for day-to-day economic activities, can help insulate an area from economic downturns because of the interrelatedness of these businesses to the local supply chain, according to the study from TPMA.
“The findings from the study highlight the importance of entrepreneurship in Northern Kentucky,” said Jonathan Faris, TPMA Senior Director, Community Impact Partnerships. “Whether it is venture capital-backed or a main street business, the continued support and growth of an ecosystem to support entrepreneurs is vital to the economic growth of the region.”
Moving forward, BE NKY will continue to work with Blue North and other partners at both the local and state levels to accelerate entrepreneurial growth in Northern Kentucky, taking key findings and conclusions from this study and putting them into action.
BE NKY Growth Partnership