The Rise of Govtech Startups

The past decade of rapid technological innovation reinvented the way many industries, businesses, and workplaces function. Alongside this period of substantial technological growth came the rise of startups seeking to fill in the blanks of newly established services and processes in all technology-adjacent sectors of the economy.

However, one industry that seemingly lagged behind is the public sector, where updates to technology and processes, digitization of the workplace, and optimization of services have remained staggered and sporadic. Now, the quick-paced hybridization of our workforce has created a necessity for updated government technology, giving rise to a new era of Govtech startups.

The Need for Updated Technology

With more than 50 percent of the US workforce currently working remotely,[1] many companies have had to update their platforms, processes, and workplace practices. Virtual meetings, project management platforms, automation and AI, and improved data tools have all become commonplace in the world of work.

To effectively employ hybrid workforces and increase operational efficiency, governments will need to continue finding ways to stress test and optimize their technology. But what about the technology governments have yet to implement? For cutting-edge technology like automation and AI, Govtech startups with resources, technological experience, and dedicated maintenance have started to bridge the gap towards governments of the future.

A Decade of Rapid Growth

Accenture found that the Govtech market currently spends $400 billion annually on updating or implementing government technology, showcasing the market’s significant and rapid growth.[2] Over the past half-decade, Govtech companies have taken part in the gradual digitization of governments’ tools and workplaces. However, with digitization becoming more and more of a necessity, Govtech companies have a crucial role to play.

The implementation of automation, AI, and cloud computing for government-based services is becoming increasingly manageable and preferable, but governments need companies that can maintain and improve these tools, or replace them based on tech trends and innovation. The introduction of new technology also brings about the potential to reduce cost and maintenance spend; the UK reported that in 2020, it would likely spend nearly £22 million on upkeep for outdated software and systems.[3]

Through Govtech companies, governments will noticeably reduce spend, increase operational efficiency, and restructure the way their work is allocated, planned, and performed. The continuous rise of technology and hybrid work has expanded the Govtech sector, creating a wide range of unfulfilled service opportunities.

Currently, there are nearly 2,000 Govtech startups functioning in Europe, largely concentrated in France, the UK, and Germany.[4] We stand at the precipice of a sea change where Govtech startups are becoming more prevalent, profitable, and in-demand. This ongoing rise of Govtech startups is only the start of a trend, forecasting the important relationship between governments and technology that, in the near future, only Govtech businesses will be able to mediate.

Interested in learning more about the ways your company can capitalize on the Govtech boom? AllSTEM has the network and expertise to connect you to your goals. Learn more at www.allstemconnections.com.


[1] https://www.northone.com/blog/small-business/remote-work-statistics

[2] https://www.accenture.com/_acnmedia/pdf-90/accenture-govtech-pov.pdf

[3] https://www.forbes.com/sites/bernardmarr/2022/01/27/the-five-biggest-tech-trends-transforming-government-in-2022/?sh=604b651018f5

[4] https://www.forbes.com/sites/bernardmarr/2022/01/27/the-five-biggest-tech-trends-transforming-government-in-2022/?sh=604b651018f5