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Could GovTech become bigger than  FinTech?

Ian Dowson


GovTech Digital Government

As digital technology continues to evolve and permeate every aspect of modern life, its role within the public sector is changing. Ian Dowson, the co-founder of GovTech, explores the opportunities being created and the potential for true digital transformation in governments worldwide.

Ian Dowson - Portrait CROPGovTech is gaining momentum as it is passing from an emergent state and is poised to go global, it could be in a similar position to FinTech 5 years ago, according to a report GovTech: an Emergent Sector Revolutionising Public Services. Global government spending on technology is one of the largest ICT segments and is estimated to be a market worth at least $450 billion, with the US worth over $100 billion.

Fundamental change

At the core of this transformation are users (citizens) and the need for culture change within government to focus on system and service outcomes the goal is to revolutionise all aspects of government service delivery to the citizen and government process at all levels. The UK has made considerable progress being ranked No. 1 in E-Government by the United Nations and No. 1 in open data by The World Wide Web Foundation.

System wide change

That’s not all the UK Government has done, there has been a drive to open procurement to SME’s, implementation of open data polices by all Government departments, public bodies, cities and local authorities. Exemplars such as Data.Gov.UKTransport for London (TfL), London DatastoreDataMill North demonstrate the UK’s scale in providing open data, this effort is supported by civic institutions such as NESTA, the Open Data Institute (ODI) and the Local Government Association.

Blueprint emerges

A blueprint for how government and civil society services can undertake digital transformation has emerged. This task of digital transformation is beyond the capacity and resources of government alone and there is a major role to be played by Startups and private investment bringing in additional human capital, financing, entrepreneurial skills, speed of delivery alongside the resources of the global Startup ecosystem.

Open data creates startups

Startups bring a different mindset in service delivery into GovTech, with their use of API’s (standardised data transfer), opendata and their capacity to combine multiple data sources to find monetisation propositions. Transport for London (TfL) is an example of what happens when public data is open, now with over 8,500 registered developers, 600 plus travel apps and millions of daily API calls.

Startup Citymapper grew using TfL API transport data and is rapidly becoming an international success, having raised investment in the region of $50m. They have come full circle with TfL running an experimental bus service in London CityMapper Smart Bus based upon the data provided by their app.

A UK GovTech ecosystem is developing and has exits.

During 2017 the UK’s GovTech Startup ecosystem has developed rapidly with the Scottish Government supporting a CivTech® Accelerator that has just completed its second cohort of nine projects.

Wayra opening Fair by Design in Oldham an accelerator designed to tackle the UK poverty premium, The Rain Clouds in Victoria SWI opening a dedicated CivTech coworking space, Public GovTech Investors announcing their first GovStart acceleration program,  Zinc VC’s Transformer programme for big social problems that has just announced its first mission Women and Girls Emotional and Mental Health and Nitrous.London working with TfL  with six transport related Startups.  Palatine Private equity has raised a £100 million fund for impact investing targeting a positive social and/or environmental impact alongside industry-standard returns.
Acquisitions have occurred , Just Giving was acquired by Blackbaud for £95 million and Streetlife with 1.5m members was acquired by Nextdoor.

Not only in the UK

In the United States GovTech Fund, Omidyar Network, Knight Foundation, Ekistic Ventures are developing the GovTech ecosystem funding system with UBS raising $350 million for a social impact fund The Rise Fund.

The questions that occurs is will Africa go directly to G2P (Government to People) using mobile telephones as the delivery channel? It may happen at different paces throughout the continent but the answer is certainly positive.

Additional services are being built on the backbone of Africa’s highly developed mobile payments and banking systems are already well underway with at least 800,000 PAYG (Pay as you go) solar panel installations. The level of sophistication of the African ecosystem can be measured by the fact that the Kenyan Government has issued M-Akiba, the world’s first Treasury Bond accessible by mobile phones. Very high calibre Startups are gaining international traction such as WhereismyTransport a transport platform for emerging cities.

So could GovTech become as large as FinTech?

Around $120 billion has been invested in FinTech since 2010. In comparison the estimated $1 billion investment into GovTech to date is tiny.

GovTech is now entering an exciting phase; Government and Civil society digital transformation models have been developed and proven. Governments are poised to embrace Startups, and to utilise PE funding capacity and processes.

From this vantage point, the answer is yes. GovTech could indeed become as large an investment market and force for change as FinTech.

Ian Dowson

Ian Dowson

Co-Founder GovTech Research

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