Govtech Startups Reimagine Software For A Post-pandemic Future

Source: PitchBook, Priyamvada Mathur
Photo: Michael on Unsplash

The transition from analog to digital processes by local governments across the US gained momentum after the pandemic forced public services online. This led to new opportunities for govtech startups creating SaaS tools that engage communities, schedule virtual town hall meetings, mitigate ransomware attacks and more.

“The SaaS selling model for software doesn’t look the same in government, as there is a ton of inertia,” said Stephanie Beer, senior director at OpenGov, a developer of cloud computing software for public agencies. “Governments will not buy without proof points that the software is being utilized by governments like them.”

But the rise of remote work, a massive inflow of federal stimulus funds and an increase in ransomware attacks have led to a growing need to deliver a safe digital experience to local businesses and residents, Beer said.

The threat of cyberattacks has forced counties to recognize the need to proactively secure their own systems. For example, nearly two years after hackers shut down Baltimore’s computer systems and left many city services inaccessible, the county is still in the process of rebuilding by investing in cyber forensics and monitoring tools.

“Cyberattacks have been particularly painful for cities and counties, who often house data on vulnerable, on-premise servers,” Beer said. “Big attacks like Baltimore’s make the news, but many other cities have had similar experiences.”

That challenge has opened doors for government-focused cybersecurity startups like ID.me, which raised $100 million in 2021. The Virginia-based company is the developer of a security platform that provides identity verification services.

During the pandemic, smaller metros in areas such as the Midwest saw high population growth that is now contributing to demand for purpose-built software to address the complex planning requirements for those expanding communities.

The latest VC deal to underscore investor interest is Polco’s $14 million round led by Mercury Fund this week. The Wisconsin-based company’s platform helps local governments plan spending grants and serving citizens via surveys and analytics.

A generational shift in the talent profiles of government employees is also driving demand for technological advancements.

“Millennials don’t want to work with an antiquated tech stack,” said Beer, “which makes it harder for governments to get the resources they need and heightens the need for technology.”

Featured image by jabiru/Shutterstock

https://pitchbook.com/news/articles/govtech-VC-startups-deals-cybersecurity-saas