Can startups ease pain points in government? Ron Bouganim, a former entrepreneur and leader of the Code for America accelerator, says they can, especially in procurement, communications and moving data to the cloud.
Bouganim, managing partner of the San Francisco-based Govtech Fund, was in Chicago on Monday to speak at tech hub 1871 about his early stage venture fund, which focuses on startups that use software to solve problems for government entities.
Global government contracts offer a $450 billion opportunity, Bouganim said, making work in that space attractive to entrepreneurs and investors alike.
City and municipal governments are at the forefront of embracing technological innovations, largely because they find the cost savings startup solutions can offer attractive, while state and federal government are years behind, he said.
He launched the first Govtech fund, which will invest $23 million, in September. Govtech has since invested in four companies, including a community-engagement platform called MindMixer and a form-management tool called SeamlessDocs.
“The mission of the fund is to enable government to become more efficient, more responsive and better able to serve society,” Bouganim said. Startups can contribute to that transformation by offering innovative, affordable solutions, he told Blue Sky before the talk.
Canada native and serial entrepreneur Bouganim became a U.S. citizen in 2009, at which time he got “caught up in patriotism” and wanted to get involved in politics through technology. He volunteered with Code for America and went on to help launch the San Francisco-based nonprofit’s accelerator program in 2012.
Accelerator adviser Tim O’Reilly helped Bouganim launched the Govtech Fund and serves on its advisory board. All of Govtech Fund’s portfolio companies have gone through the Code for America accelerator.
Bouganim said startups historically struggled to sell to government, where purchase decisions often take a long time. Plus, many startups used newer technology like the cloud before government institutions were ready for it.
But out-of-date government technology leads to waste and inefficiency, “not acceptable for an enterprise that is critical to society,” Bouganim said, and the two sides are finding ways to work together.
He envisions a future in which citizens’ interactions with government will be as easy as their experiences on the consumer Web. Bouganim says there’s no reason that sending in official forms should be any more difficult than using an app.
Cities are increasingly appointing chief data officers or chief information officers to make sense of which technologies are worth buying into, Bouganim said. He didn’t give specifics on which cities he thinks are tackling such innovation best. Chicago has had a chief information officer since December 2012. Brenna Berman took over the role in August 2013 after it was vacated by the city’s first CIO, Brett Goldstein.
Bouganim suggested state governments are three to five years behind city-level innovations and that the federal government is moving at an even slower pace.
“I think it’s going to be a long innovation cycle,” Bouganim said. He said he expects to see returns and liquidity events in the 10 years the fund is open.
Govtech Fund invests in companies that have already sold into some government organizations, using that activity as proof of demand.
Bouganim said he’s looking for companies that can bring government to the cutting edge while not alienating workers and citizens with technology that may be too advanced for the average person.
“If you have a government experience that looks and feels like it could’ve in the ’70s, that’s a good place for us to innovate,” Bouganim said.
