The rise of GovTech: Why startups should work with governments (Sponsored)

There’s another market that B2B startups with innovative digital solutions can target – the public sector. While working with the government might not be the obvious choice for startups, it’s a unique opportunity. Now, there are various GovTech initiatives creating new opportunities for tech creators to collaborate with local and global public sector institutions. It’s an exciting development for both innovators and governments, as well as wider society. 

So, why should startups work with the public sector?

Collaboration between governments and startups can bring about plenty of exciting and meaningful outcomes. Here we outline three reasons why entrepreneurs should consider the public sector as their next target. 

Global market size

The global market of digital tech solutions for governments – GovTech – is currently estimated to be around €441 billion! 

In Europe alone, the GovTech market is sitting at around €166 billion, and it’s estimated to grow trifold in the next 3 years – opening even bigger expansion prospects to digital creators. This is a market with a potential that’s not to be underestimated. Tapping into this sphere and making a success of it brings an exciting future to any startup with ambitious plans. 

Further, there are no special prerequisites for an IT company to become competitive in the global GovTech market. Multiple countries face very similar challenges and are looking for the same solutions that could solve them. Therefore, locally created GovTech solutions might become very sought-after export items, especially if they are already tested locally and brought impressive results.

For example, a Lithuanian mobility-as-a-service startup is successfully allowing people to plan their public transport trips not only locally in Lithuania, but also worldwide, reaching cities such as Riga, Berlin, Zurich, Jakarta, Bogota, Rio de Janeiro, and beyond.

Local governments are prepared to spend 

Global expansion is usually the biggest motivation for most companies, but this begins with setting up a strong foundation. The growing need for digitalization in the public sector and with governments locally allows startups to successfully take the first steps in their country. 

Creating pilot solutions for local markets, successfully selling them, and getting feedback from public sector clients can help ambitious startups to perfect their solutions and prepare them for global clients and markets. 

Countries already spend billions of euros on public procurement, and the procurement part of the software and IT services is growing every year. In the near future, the need for digitalization will only grow, so businesses have a great opportunity to secure a new client with deep pockets for life – the public sector. 

Reliable clients

For startups that are only starting or are focused on scaling their business, public sector organisations can become reliable long-term clients – there is no unexpected risk that the client might go bankrupt! Therefore, new and fast-growing companies are safe from the losses that might be fatal in the first years of business.

In addition, startups working with public sector clients, who are providing the service to wider society, can meaningfully contribute to smoother processes and technologies that make everyday life easier for the citizens.

How to get started?

Govtech solutions are getting increasingly more attention. To facilitate enhanced collaboration between public and private sectors, many countries establish GovTech initiatives that are willing to help companies to meet their potential public sector clients.

Arune Matelyte, the Manager of GovTech Lab Lithuania said: “the public sector is as motivated as ever to explore the use of digital technologies and make its processes more effective. The society has already noticed great improvements in many digital services, such as tax declaration in Lithuania. Our goal is to understand the problems that the public sector faces and ensure that the startups and innovative companies could successfully apply their solutions to solve them. There is no better time to start working with the public sector than now.”

To learn more about GovTech Lab Lithuania and how the country is steadily becoming one of the GovTech leaders in Europe and the whole globe, subscribe to the GovTech Lab Lithuania newsletter

GovTech Lab Lithuania is a project funded from European Regional Development Fund. Number and name of operational programme measure: 01.2.1-LVPA-V-842 Inogeb LT.