GovTech: Where the Action Is

Government efforts to stimulate the innovation ecosystem usually consist of outward focused efforts. Now, however, we’re at an inflection point where work going on for decades to improve government can also be a catalyst for investment, entrepreneurship and job creation. Ever heard of a market segment called GovTech? If you haven’t, you will. Generally, it refers to technologies that improve the operations of government. A strong but brief market segment overview can be found here. A more in-depth treatment can be found here.

In the past, entrepreneurs, genetically anti-bureaucratic, have kept their focus on the private sector. The convergence of new technologies, demographic changes and the urgent need to reduce costs are driving new investments and entrepreneurial interest. For example, below are new funds and investments focused on this marketplace.

The GovTech Fund’s mission is to “Harness the power of transformers, technology, and capital to help government become more efficient, responsive, and better able to serve society.” Their overview of the market, found here, is excellent.

An example of traditionally non-GovTech funds moving into this area is Andreesen Horowitz’s recent GovTech investment, found here.

Expect more intense investment in this space in traditional IT modernization projects. However, this is especially true in new areas like real-time video analytics, driverless vehicle and drone traffic control, and public service cognitive chatbots come on line. Last year, for example, almost 100 GovTech startups raised approximately $200m. Exits such as the Climate Corp sale to Monsanto, Opower to Oracle, 2FA Inc. to Identity Automation, and Urban Engines to Google, are accelerating. All of this bodes well for entrepreneurship, innovation and job creation, as well as benefiting all of us as citizens.

Working with the government, as I have certainly learned, is a complex and nuanced challenge.  As Steve Case in his recent book The Third Wave points out, companies – whether startups or established – need government savvy leaders in business roles to accelerate the growth of their bottom line.

As a private sector gal, I hadn’t thought that government innovation was such a hotbed. Now that I am working to turn around the state of Illinois and am engaging with this market segment, I am very happy that it is.