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3 reasons why startups should work with governments

B2B startups with innovative digital solutions have a unique opportunity to provide their products or services to one more target market – public sector clients. Even though startups often do not think about the government as a potential client, various GovTech initiatives are creating opportunities for tech creators to collaborate with local and global public sector institutions.

So, why should companies creating digital solutions work with the public sector after all? Let’s look at the main reasons.

Global market size

The global market of the digital tech solutions for the governments – GovTech – is currently estimated to be around 441 bn euros. In Europe alone, the size of the GovTech market is currently around 166 bn euros. Moreover, it is estimated that GovTech market will grow trifold in the next 3 years, opening even bigger expansion prospects to digital creators.

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 a very sought-after export items, especially if they are already tested locally and brought impressive results.

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

 Local governments spent on digital solutions

The global expansion is usually the biggest motivation for most of the companies. However, the growing need for digitalization in the governments locally allows startups to successfully take the first steps in their country, too. Creating pilot solutions for the local markets, successfully selling them, and getting feedback from public sector clients can truly help the companies to perfect their solutions and prepare them for global GovTech clients.

Countries already spend billions of euros for public procurement, and the procurement part of software and IT services is growing yearly. In the nearest future, the need for digitalization will only grow, therefore business has a great opportunity to acquire a new client – public sector.

Reliable clients

For startups that are only starting or are focused on scaling their business, public sector organisations can become a reliable long-term client – 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. Moreover, companies working with the public sector clients, who provide their services to the society, can meaningfully contribute to smoother processes and technologies that make everyday life easier for the citizens.

Where to start?

Governments are paying increasingly more attention to the GovTech solutions. To facilitate the 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 that “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 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.