Govtech: What Is It and Why Now?

Perhaps you've already come across the word govtech, it sounds like something to you and you're curious. We hope that after reading this article the concept will be clearer. In fact, we hope you want to know a lot more.

Govtech is a new space where startups, scale-ups and digital SMEs collaborate with public institutions to solve challenges that can impact thousands of people. Challenges in areas as fundamental as the provision of public services, in internal efficiency or in democratic quality.

Every day we discover more digital solutions whose objective is to improve education, make life easier for chronic patients, promote recycling, measure the carbon footprint, or help make critical decisions based on data. However, although all these solutions are there, and they have proven their value, they still have no impact on public administrations at scale. While emerging digital companies are playing a central role in digitalization in all types of industries, The public sector still does not integrate this type of solution into its services, as if operating in a parallel world.

There are many reasons for this situation. Here are some of the ones that seem most relevant to us:

• Officials and public workers don't cross paths with these types of providers, so they never get to know their solutions. Without this prior knowledge, it is unlikely that an institution will demand such solutions. Normal, it's innovation, these ideas don't come to mind to just anyone.
• Public purchasing systems, regulations and processes are applied in such a way that they make the supply of innovative, agile and young companies uncompetitive, excluding them from the system. This is reflected in the way tenders are designed whose solvency and award criteria tend to favor consolidated economic operators with a substantial turnover, and with mostly conventional solutions. No, it is not necessary to buy Telefónica to ensure the successful execution of a 100,000 euro contract. And neither does the Law require it.
• And there is a lot of myth on one side and the other. Startups think that the public doesn't pay, or it pays late, and everything moves by the plug. Officials believe that all startups are two guys in a garage. Then they are surprised to learn about examples such as that of the startups in Madrid Electronic ID who digitized the French government's social security card, Medical savanna who works with thousands of medical records or Tucuvi which has just received 5.5 million from the European Commission.

But there's more. Govtech doesn't just bring great solutions. Also can be a great instrument of public transformation. Working hand in hand with a startup forces institutions to define and prioritize their problems taking into account the person using that particular service, communicate their needs openly (and recognize, yes, that they have a problem), experiment, test, measure, and learn to rethink the service. Public teams are empowered in the process, and they work hand in hand with the startup, breaking the typical relationship Consultants of “I'll do everything for you” so common when working with large companies.

Finally, we can't think of a better way to promote the territory's entrepreneurial ecosystem. Grants and grants are great, but what companies, especially innovative ones, need are customers. Govtech public procurement is committed to companies in its territory and helps them to grow. In recent years, institutions have focused all their efforts on promoting more R&D, and that's fine, but it's not enough. The big idea, if it doesn't grow, becomes small in two days. We need purchasing policies that not only promote the generation of innovation but also the growth of innovative companies in the territory. We know many institutions that are making enormous efforts (we know) to develop Innovative Public Purchasing programs, but then they don't make an effort to open their commercial purchase to startups, scaleups or digital SMEs already in the market with real virtues.

There is a certain alignment of the stars, and what seemed crazy 5 years ago is now a reality in Spain, and not to mention in the United States or Great Britain. In our country, municipalities, provinces, communities and public companies are committed to creating pre-commercial spaces to test scale-up startup solutions in controlled environments and thus inform the future digital demand of their institution. In Europe, the European Commission has created its first Govtech incubator and the OECD Promote this space as one of the priorities in their public digital agenda. Even investors, traditionally allergic to everything that sounded public, are reconsidering their position. It is worth reading Andreessen Horowitz, one of the most powerful investors in the United States, and his investment thesis that they have called “American Dynamism” (American Dynamism) which is committed to companies that are solving the great challenges of fundamental pillars for the country's development, such as energy, health, education, housing or security.

The govtech world has just emerged, and everything is yet to be done. At Gobe Insights we will share our learning, discoveries and designs, so that we can, together, have a positive impact on our society.