Public Services > Central Government

Start-ups pinpointed for £20bn GovTech opportunity

David Bicknell Published 03 July 2017

Investment firm Public supported by names such as Bill Crothers and Mark Dearnley picks initial ten start-ups to help transform public services

 

A public sector investment firm has named ten start-up companies it is backing to help transform public services as part of the emerging so-called ‘GovTech’ market.

Public, which was launched by former No 10 aide Daniel Korski, and which has former Whitehall specialists such as former UK chief procurement officer Bill Crothers and former HM Revenue and Customs (HMRC) chief digital and technology officer Mark Dearnley onboard as backers, argues that the digitisation of government could be worth £20bn by 2025, with the UK likely to lead the world in GovTech.

It’s new GovStart programme has been launched alongside the publication of a report , ‘The State of the UK GovTech Market: Unlocking the potential of start-ups to solve public problems’ discussing the scaling of the opportunity in the UK. The investment firm says the GovTech sector offers a “vast opportunity” for small companies to grow by focusing their business model on improving public services. 

Public argues that technology is transforming every aspect of society and government is no different. It suggests that like many other markets, including retail and financial services, the most innovative products are coming from start-ups, with GovStart seeking to help these companies understand the public sector.

The companies of the first GovStart cohort are:

  • Adzuna - a search engine and advice service for job applications.
  • Ask the Midwife - an online health service for prenatal issues.
  • Calipsa - artificial intelligence that monitors CCTV footage.
  • Cera - an adult social care platform.
  • Eyn - a visual identity verification system based on machine learning.
  • FlyNotes - a dental consent service for dental and medical operations.
  • Novoville - platform connecting local government with citizens.
  • Red Sift - platform that enables large data sets to be analysed securely.
  • RotaGeek - SaaS based platform, providing employee scheduling software for organisations
  • Pockit - a bank focused exclusively on the unbanked and financially underserved.

Korski, Public’s co-founder and chief executive said, “We are tremendously excited to launch the first cohort of our GovStart programme. These companies offer smarter, more efficient technology solutions to government, with the potential to deliver significant benefits for both citizens and the state. What’s more they show that technology isn't just about cool hipsters in Shoreditch but about life-improving support for carers, smarter transport systems and new ways of training young people.

Alexander de Carvalho, co-founder and Public’s CIO, added, “Every sector of society has been utterly transformed by software from retail to banking. The next great transformation will be the change to public services. And it will be driven not by large vendors but by smaller start-ups with new products. And the best news: this is a $400bn global market where the UK can lead this field.”

Public said, “Demands on government services are increasing at an extraordinary pace due to a growing and ageing population, ever-greater security concerns, budgetary restraint, and higher expectations from digitally-savvy citizens. People demand more of the state, as they have become accustomed to smartphone-empowered lives.

“Yet the state, unlike private enterprise, is struggling to innovate. Introducing new technologies, coupled with new business models, will enable governments to transform public services by providing intelligent solutions directly to individual citizens at the same time as reducing or avoiding costs and increasing efficiencies.”

The report offers a history of the UK GovTech market from 1997 when Tony Blair first introduced e-government initiatives through to the most recent Government Transformation Strategy in 2017. It argues that while these reforms have made the UK a market leader, the pace of centrally-led digital reform has slowed recently, though local governments, from Glasgow to Leeds, have picked up central government slack.

The report also showcases the emerging UK GovTech ecosystem which includes surveillance-enhancing algorithm developer, Calipsa; the midwife/patient advice platform, Ask the Midwife; all-in-one online healthcare platform for homecare, Cera; and Pockit, a company using new technology to provide bank accounts geared towards supporting the most impoverished and marginalised in society.

It has also a created a list to date of 100 product-led GovTech companies which can benefit from public sector sales cycles becoming less complicated. Public estimates that the sales cycle now last on average between 2 months and 18 months.

The report also cites two global examples of GovTech. It argues that Denmark has shown the way with NemKonto, a citizen’s account for payments to and from government. Its e-Identification scheme, NemID, gives every Danish citizen a secure means of personal identification online. It points out that out of a population of little more than 5m people, 4.8m already use NemID. Yet it did not exist until five years ago.

It also cites the Indian state of Karnataka, where the government has rolled out a database to manage millions of land records. Farmers need a copy of their landownership to apply for a bank loan. Before the service, the process was long, costly and very painful. Now that it has become digitised, it has become popular with semi-literate farmers.

Companies named in the Public 100 include some more familiar names such as Bramble Effect, Dr Foster Intelligence, Firmstep, FutureGov, FlyingBinary and Becrypt.

The report also issues a strong warning on Brexit. It said,” For the UK’s GovTech market, it is clear that Brexit represents both opportunities and risks. If Brexit leads to a larger re-think of governmental systems, from rural payments to customs arrangements and identification, then it must inevitably drive a significant adoption of new technologies and new suppliers.

“ If leaving the EU leads to a re-think of procurement policies and regulations, with a preference given to UK firms, then there will undoubtedly be a short-term boost to a sector which is still very UK based. However, if this leads to reciprocal barriers for UK start-ups seeking to enter European markets, then HMG would have to redouble its support for GovTech start-ups to succeed in non-European markets."

But, it added, “If Brexit impacts the economy – and crucially, investor confidence – then all digital markets, including the GovTech market, will suffer.

“Access to European talent is crucial to the UK GovTech market. We need only look at the Public 100 list to see how many of these companies have been built by immigrants from Europe and beyond. The drive to build the skills of young people in the UK is welcome, but will not yield results in the timeframe required for the UK to ensure that it becomes the world’s GovTech hub. So any impact on the access to skills, whether because of quotas, bureaucratic obstacles or even just the tone of public discourse, will be detrimental to the UK’s GovTech market.”

 








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