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The 9th annual list of government tech companies that are changing the way government works comes with an added twist: a huge injection of capital through the private equity market.
Agencies are drawn to the promise of increased capacity and agility, but they are not always prepared for the disruption brought on by increasingly well-funded players.
Private equity’s bullish approach to government technology hinges on the company’s recession-proof appeal and pivotal role in digitizing the way government works, and the private sector’s ability to optimize service delivery and operations. We see this as an opportunity to bridge the innovation gap between the sector and the public sector. This year, his GovTech100 features companies that derive the majority of their revenue from sales to government, and reflects a diverse mix of established companies such as CivicEye and Versaterm, as well as new entrants.
This episode features government technology Associate Editor Ben Miller, who helped curate this year’s list, and Thad Reuter, who wrote the cover story on private equity’s impact on government tech markets.
Show memo
Here are the main takeaways from this episode:
Gov Tech’s appeal to private equity:
- Resilience: Gov Tech is perceived as recession-proof and plays a key role in providing digital services to governments, contributing to its attractiveness to private equity.
- digital transformation: Increased cloud adoption and the shift from analog to digital processes in government services make government technology an attractive investment.
Factors that increase fertility in Gov Tech:
- Growth of Software-as-a-Service: Expansion of SaaS and cloud-based services is contributing to Government Tech’s attractiveness to private equity investors.
- “Amazon Effect”: Consumer expectations for fast and efficient service are influencing government technology companies to imitate Amazon’s one-click model.
- modernization needs: The drive to bring government into the 21st century creates ample opportunity for growth and investment in government technology.
Challenges in emulating Amazon efficiency:
- Customer and constituent services: Different expectations and different service models create challenges in replicating Amazon’s efficiency in a government context.
- Limitations of consumer-based models:Government’s unique role of serving all voters, regardless of their choices, poses limits to mirroring the corporate model.
Private equity focuses on end-to-end platforms:
- Investing in growth: Private equity interest in end-to-end platform development is driving investment in companies such as Accela and Granicus.
- similar growth potential: The remarkable growth of certain companies points to the possibility of a similar pattern occurring in the government technology space.
GovTech 100 — a mix of incumbents and new entrants
- change of focus: This GovTech100 list focuses on emerging startups and serial entrepreneurs working on public service innovation.
- Newcomer to watch: Public safety organizations such as CivicEye, Fieldware, and Versaterm participate in the GovTech100, along with niche-focused companies.
Collaboration with government technology startups:
- disruptive solution: Startups bring innovative solutions and responsiveness to pressing government needs.
- Possibility to discover new approaches: Engaging with startups may reveal new perspectives and ways to address long-standing problems.
Expected evolution of government technology companies:
- Flexibility and adaptability: Agencies working with emerging companies need to anticipate changes in focus, offerings, and potential expansion as these companies evolve through the investment cycle.
- Product evolution: Growth can lead to changes and expansion of services, creating both challenges and opportunities for agencies.
Related Links To stories referenced in the episode:
Editors used ChatGPT 4.0 to summarize episodes in bullet point format to help create program notes.
