Govtech Startups Deserve a Fresh Look
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Govtech Startups Deserve a Fresh Look

By Rachel Stern, Vice President, InState Partners

Rachel Stern, Vice President, InState Partners

With the rapid pace of innovation in the govtech sector, public procurement officials must take a fresh look at how they can integrate new technologies into their suite of solutions. While governments are not in the business of risk-taking, it serves agencies and their constituents well if procurement offices work to eliminate the roadblocks that often serve incumbent companies at the expense of new innovations. Early-stage companies are creating products that are less expensive, faster to implement and more nimble than many older, existing products and technology. Bridging the gap between new technologies and the needs of state and local governments is not easy, but it can bring powerful results.

There are three significant challenges that limit the success of new technology integration. First, government buyers often don’t have exposure to the emerging technologies that address their particular challenges. Because new companies are often singularly focused on developing their technology, they have limited internal resources and staff to devote to targeted, in-person sales.  Whereas established technology companies have the time to build brand recognition long before an RFP is released, startups often lack the relationships and credibility to win the contract.

Additionally, even when startups do devote their resources to in-person education, they may have limited experience pitching to government. Startups rarely have a lens into inner-government workings, and they often lack broader insights into market opportunities on a national scale.  As such, they may target agencies and buyers who lack the political and budgetary impetus to buy that particular solution. When these companies do get in front of the right people, many fail to pitch their product to the particular needs of that government buyer, focusing instead on broad capabilities or technological details. A poor product pitch rarely incentivizes government buyers to follow up, which means agencies can miss out on a creative new solution.

Finally, government CIOs and agency heads are threading a difficult needle when considering purchases: theirs is the unenviable job of navigating changing political agendas in the executive and legislative branches, while justifying spending taxpayer dollars and keeping their data secure. Understandably, these factors discourage risk-taking and create wariness of any new technologies and companies without long track records. When public sector buyers do open the door to new technologies, however, they often find innovative ideas for streamlining government services and creative solutions that bring government into the 21st century.

 If government agencies opened up contract opportunities to emerging technologies, the suite of innovative solutions would grow exponentially. The results are worth it for everyone"

One example of an innovative company creating value for the public sector is Acivilate, which focuses on reducing recidivism and prison costs through technology. Acivilate created a SaaS platform that allows corrections and probation departments, community providers and returning citizens to coordinate resources, thereby limiting recidivism. By creating a tighter safety net and increasing communication with these returning citizens, states and counties can reduce prison costs and empower a swath of vulnerable citizens to get back on their feet.

After working to identify the states where prison reform is a political and budgetary priority, Acivilate now has a number of pilot projects across the country with several pending state contracts. The company has also become a thought leader in how technology can help reduce the human and financial toll of our current prison system, and as such, is a powerful partner for state corrections and probation departments as well as legislative leaders.

Another successful public-private partnership is PayIt. PayIt has won national accolades for its mobile app payments platform that works for every level of government. The PayIt app offers easy solutions to time-consuming and antiquated government interactions, like standing in line at the DMV, by providing constituents with a smartphone tool to abide by regulations. Just a couple of years ago, few state and local governments were utilizing mobile apps or working within the cloud. Now, decision-makers at government agencies are clear on the value of mobile and cloud-based applications and PayIt is growing quickly, with contracts in 15 states and more pending.

Acivilate and PayIt are just two govtech companies that help tackle government challenges in an era of limited resources.  Other new companies are working on projects ranging from reducing Medicaid fraud, to creating sensors to help direct first responders in school emergencies. But the emerging govtech market is still evolving and desperately needs government stakeholders willing to seek out creative technology solutions, even from early-stage companies. 

At a recent Cloud conference, e. Republic reported that in 2019, state and local IT spending will exceed $107 billion, with $54.4 billion being spent by states alone.  Twenty-eight percent of that will be spent on software, cloud and IT solutions.  If government agencies opened up contract opportunities to emerging technologies, the suite of innovative solutions would grow exponentially.  The results are worth it for everyone.

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