Measuring and monitoring water, gas, electricity through off the shelf sensors and analyzing the data to detect flaws and improve efficiency.
Self-driving cars, which require extensive vehicle to infrastructure (V2I) such as lights that talk to the car.
Cybersecurity on everything from payments to email communication, including making it harder to steal identities.
All of these can be considered GovTech, which given the increasing ubiquity we can write as govtech. Broadly speaking, govtech is about applying emerging technologies to improve public services and closing gaps that private enterprise is slow or unable to address as effectively.
The World Is Not Flat
Govtech tends to be disproportionately stronger in smaller or developing ecosystems since the markets are weaker. An example of the former is Estonia, which has built itself into a “digital republic,” doing everything from payments to voting electronically. An example of the latter is India, where the India Stack is celebrated as a leapfrog giving a universal digital identity for 1.3B citizens. The US is less known for govtech but there are many promising startups here too, case in point the 2020 GovTech 100 published by “Government and Technology.”
Staying Away
VCs have historically shied away from govtech for multiple good reasons:
1) Sales Cycles — Are long, rivaling large enterprise contracts, and typically 9-18 months
2) #Customers — It’s usually about a few marquee customers and they are often constrained by budgets
3) Politicization — Governments are usually more worried about avoiding mistakes than capitalizing on opportunities, And if the decision and/or execution is subjugated by political processes then changes in officials can significantly affect business
Leaning In
But times are changing and the global covid-19 crisis is very likely going to accelerate govtech. Key reasons why:
1) Awareness — Political pressure to modernize infrastructure, especially when it comes to healthcare delivery. Which in most developed countries is far more of a public than private service.
2) Realism — Governments starved for revenues will look more favorably upon projects that can reduce waste and increase efficiency.
3) Deficit Spending — History has shown time and again that governments will print money and increase its circulation to jumpstart the economy. To explore further the Wikipedia article on Keynesian economics is worth a read.
At Tau Ventures we believe the pendulum is swinging further towards pros. Govtech will continue being hard, definitely not for the faint of heart, but it will become easier given the urgency of rebuilding world economies.
Originally published on “Data Driven Investor,” am happy to syndicate on other platforms. I am the Managing Partner and Cofounder of Tau Ventures with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr — good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are my own.
