Keystone Innovation Zones

One of Pennsylvania's most valuable resources is our phenomenal collection of colleges and universities. Another is the talented group of graduates who emerge from them regularly, full of ability, energy and entrepreneurial ideas. Yet every year, thousands of those students take their diplomas and their abilities somewhere else, and Pennsylvania ends up being a leader in the export of talent.

The Keystone Innovation Zones (KIZ) partnership makes us a leader in innovation instead. KIZs represent a smart and sensible way to keep our young entrepreneurs living, working and driving economic growth in Pennsylvania, creating new opportunities for all of us.

These zones create "knowledge neighborhoods," close to colleges, universities and training institutions to keep new graduates and budding entrepreneurs in the area. By focusing talent and resources in clusters, KIZs transform these communities into technology incubators. Here, entrepreneurs will find an unbroken chain of ready resources, including research and peer groups, entrepreneurial support, venture capital and workforce and financial assistance. They'll also be able to take advantage of partnerships between educational institutions, local leaders, banks, businesses, investors and foundations that already exist in the community. And most important of all, their new ideas and new businesses will drive our new economy, creating long-lasting jobs and accelerating economic growth in Pennsylvania.

View Program Guidelines (.pdf 114 KB)

For more information, call (voice) 1-866-GO newPA (voice 1-866-466-3972).

Keystone Innovation Zones Frequently Asked Questions

What exactly are Keystone Innovation Zones?
Keystone Innovation Zones (KIZs) are designated zones that may be established in communities that host institutions of higher education - colleges, universities, junior colleges and technical schools. These zones are designed to foster innovation and create entrepreneurial opportunities. They do this by gathering and aligning the combined resources of educational institutions, private businesses, business support organizations, commercial lending institutions, venture capital networks (including angel investors), and foundations. In other words, where a partnership of these organizations is formed, a Keystone Innovation Zone is possible.

Why is Pennsylvania creating the Keystone Innovation Zones?
Employment growth is central to a better future for Pennsylvania. Our research and development clusters are not translating well into entrepreneurial activity and jobs, and Pennsylvania continues to lose many of its most talented young professionals and graduates. This program creates a "knowledge neighborhood" in which educational institutions, economic developers, businesses, capital sources and community leaders can connect with one another quickly and effectively to provide a network of support and resources. It ensures that Pennsylvania's ideas are effectively developed into positive economic activity.

How many Keystone Innovation Zones will there be?
There is no specific limit on the number of KIZs. However, zones must be established within three years of the program's commencement.

Who will administer the program at the state level?
The Department of Community and Economic Development (DCED) will administer the Keystone Inovation Zone program.

Who will be in charge of the individual zones?
The zone partnerships will choose or establish an organization to serve as the KIZ Coordinator, which will be the administrative and program development agent for the zone.

How will these zones be formed?
The zone partners, as mentioned above, must all be included in the planning and execution of the zone plan, including the establishment of objectives, goals and benchmarks and the identification of resources to be leveraged.

Why would my community want to establish a Keystone Innovation Zone?
KIZs will allow Pennsylvania to make far more effective use of one of its greatest assets - its colleges, universities and research institutions. They will help to support new entrepreneurial opportunities that lead to new companies and jobs. They will create significant economic and entrepreneurial activity, and host communities will benefit both economically and socially.

What will be the focus of the Keystone Innovation Zones?
The Keystone Innovation Zones will focus on the four key areas that entrepreneurs, new companies and mature companies need to grow and expand - capital, facilities, technology innovation and workforce. KIZs will support technology innovation through the facilitation of technology transfer - the ability to leverage research and development occurring at the universities and research institutions - and the ability to commercialize the technologies, new products and processes evolving from R&D. The KIZs will align the Commonwealth's existing entrepreneurial and business development support programs and components of the stimulus package to ensure that existing companies and entrepreneurs have the support they need to build and grow their companies.

How do Keystone Innovation Zones relate to Keystone Opportunity Zones?
Although they have similar names, they are very different. KOZs strive to improve the economy of blighted areas through tax benefits. However, the new start-ups that will result from KIZs are not likely to have tax liabilities to the Commonwealth because of the lack of profits that are characteristic with early stage companies.

When can my partnership apply for designation as a Keystone Innovation Zone?
DCED is actively completing guidelines for the program and expects them to be released Spring 2004. If you are interested in being notified of their availability and updates, call (voice) 1-866-GO newPA (voice 1-866-466-3972).

What are the guidelines for application to become a Keystone Innovation Zone?
Guidelines are under development and will be published in spring 2004. To apply for KIZ designation, the partnership will be required to do the following:

Additional guidelines and clarification may be added.

What is a Keystone Innovation Zone coordinator?
This is an organization chosen by a Keystone Innovation Zone Partnership and agreed to by DCED to administer the activities of the KIZ. The KIZ Coordinator will be entitled to receive an administrative grant of between $50,000 and $250,000 to perform their duties. This grant will be phased out by at least 25 percent per year, and must be matched dollar-for-dollar by non-state resources.

What is the Keystone Innovation Zone Tax Credit?
As part of the Keystone Innovation Zone Program, $25 million per year in tax credits will be available for Keystone Innovation Zone companies. These are companies less than 8 years old that are in an industry segment that is a priority of the Keystone Innovation Zone Partnership. These credits will first become available during 2006 and guidelines will be issued later this year.

What is a Keystone Innovation Zone Innovation Grant?
One of the stated goals of the Keystone Innovation Zone Program is to create new companies in Pennsylvania by focusing our efforts at university, business and community relationships. As an incentive to universities that are involved in a KIZ partnership, $10 million will be available over the next three years to create or enhance technology transfer programs at the universities for the benefit of entrepreneurs.

When will the Innovation Grants be available?
It is expected these grants will become available in July 2004 pending passage of the Commonwealth's 2004-2005 budget and the creation of guidelines and other materials to manage the program.

View Program Guidelines (.pdf 114 KB)

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