As venture capitalists, we love big markets that are ripe for disruption - they're where startups can create and capture the most value. A half-trillion dollar market is desperate for innovation and our startups are happy to deliver.
$450 Billion. That’s the amount governments around the world spent on technology last year. Nonetheless, historically entrepreneurs have overlooked this immense market for a variety of reasons: government procurement timeframes, the legacy vendors are too entrenched, government isn’t often open to new ways of doing things and on and on…
But here’s the secret – that’s all changing.
Government agencies today are facing budget constraints that require them to do more with less and to consider significantly less expensive solutions. Sales cycles are often shorter given lower costs of software development translating to price points well below procurement thresholds. Government staffers themselves are changing – today’s CTO or CIO is younger, with an iPad in hand and ready to embrace the startup culture.
Enter govtech startups who are building hardware and software tools for governments that are significantly better than existing technologies
Enter govtech startups who are building hardware and software tools for governments that are significantly better than existing technologies — built using modern application development practices and technology stacks, inspired from the start by the user’s experience, visually stunning, leverage the cloud, enable seamless transition from fixed to mobile interactions, sold at prices that account for ever-constrained budgets, and without vendor lock-in, endless customizations, training sessions or perpetual maintenance contracts.
And govtech startups are only starting to scratch the surface of the opportunity that lies ahead given that the public sector, in aggregate, is the largest single employer in the U.S. with over 22 Million employees working in 90,000+ municipalities, thousands of state departments and massive federal agencies. Many government departments still operate using custom technology solutions built in the 1980s (!).
As software continues to “eat the world”, we’re excited about the opportunities that lie ahead for govtech startups.