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Why the Govtech Fund is a Really Big Deal

Today marks an important milestone on the road to 21st century government: the launch of the first-ever venture capital fund dedicated to government technology startups. Led by the remarkable entrepreneur, investor, and friend to Code for America, Ron Bouganim, the Govtech Fund signals that the next stage in the evolution of government technology is upon us.

When Code for America started less than five years ago, the idea of venture capital investing in companies who wanted to work with government was borderline absurd. The slow, entrenched, compliance-driven government market and the lightning-fast, iterative, customer-centered world of consumer internet tech startups (where much venture capital has been focused) seemed two very distant ends of an enormous spectrum. Products and companies in the consumer (and even enterprise) space would rise and fall in the time it would take to execute one government contract. There was no better way to get laughed out of a pitch meeting than to name government as your customer.

Today, the vast majority of the venture dollars still go elsewhere, but the [Today marks an important milestone on the road to 21st century government: the launch of the first-ever venture capital fund dedicated to government technology startups. Led by the remarkable entrepreneur, investor, and friend to Code for America, Ron Bouganim, the Govtech Fund signals that the next stage in the evolution of government technology is upon us.

When Code for America started less than five years ago, the idea of venture capital investing in companies who wanted to work with government was borderline absurd. The slow, entrenched, compliance-driven government market and the lightning-fast, iterative, customer-centered world of consumer internet tech startups (where much venture capital has been focused) seemed two very distant ends of an enormous spectrum. Products and companies in the consumer (and even enterprise) space would rise and fall in the time it would take to execute one government contract. There was no better way to get laughed out of a pitch meeting than to name government as your customer.

Today, the vast majority of the venture dollars still go elsewhere, but the](http://www.gartner.com/newsroom/id/2518815) is getting noticed. Entrepreneurs have noticed a chance to have an enormous impact on the one platform designed to serve us all, while building exciting, profitable businesses. VCs have noticed the glimmers of change that can signal opportunity in an ecosystem, possibly even disruptive change, to use a favorite VC adjective. The public has noticed that interfaces to government can be simple, beautiful, and easy to use, even if they aren’t consistently. Yet.

What are some of these signals that change is afoot?  Here are a few:

  • When we launched the first civic startup accelerator in 2012, most VCs told us no one would apply. We got 235 applications that first year alone.
  • Superstars Michelle Lee and Marcin Wichary left Google (in 2012 and 2013 respectively) to “code for America” for a year through the Fellowship program. Michelle continued her work with the City of Philadelphia by co-founding the civic startup Textizen, which is now connecting dozens of governments with their citizens through text message.
  • Textizen was one of the first of five companies born out of CfA’s work with local governments through our Fellowship program and incubated at Code for America. All five are alive, doing well, and transforming the local government vendor ecosystem.
  • CfA Accelerator alumni MindMixer just announced a $17M follow-on round of financing bringing its total raised to date to $23M and Captricity recently announced it’s $10M financing round lead by Atlas VC and Social+Capital. Friend of CfA, OpenGov, also just successfully raised $15M led by Andressen Horowitz.
  • The President of the United States rarely speaks about such wonky issues as IT procurement, but this president, in the wake of healthcare.gov, was moved to say, “what we probably needed to do on the front end was to blow up how we procure for IT.” In fact, he said a fair bit more than that, which you can read here.
  • Speaking of the President, he followed these statements with the creation of the [Today marks an important milestone on the road to 21st century government: the launch of the first-ever venture capital fund dedicated to government technology startups. Led by the remarkable entrepreneur, investor, and friend to Code for America, Ron Bouganim, the Govtech Fund signals that the next stage in the evolution of government technology is upon us.

When Code for America started less than five years ago, the idea of venture capital investing in companies who wanted to work with government was borderline absurd. The slow, entrenched, compliance-driven government market and the lightning-fast, iterative, customer-centered world of consumer internet tech startups (where much venture capital has been focused) seemed two very distant ends of an enormous spectrum. Products and companies in the consumer (and even enterprise) space would rise and fall in the time it would take to execute one government contract. There was no better way to get laughed out of a pitch meeting than to name government as your customer.

Today, the vast majority of the venture dollars still go elsewhere, but the [Today marks an important milestone on the road to 21st century government: the launch of the first-ever venture capital fund dedicated to government technology startups. Led by the remarkable entrepreneur, investor, and friend to Code for America, Ron Bouganim, the Govtech Fund signals that the next stage in the evolution of government technology is upon us.

When Code for America started less than five years ago, the idea of venture capital investing in companies who wanted to work with government was borderline absurd. The slow, entrenched, compliance-driven government market and the lightning-fast, iterative, customer-centered world of consumer internet tech startups (where much venture capital has been focused) seemed two very distant ends of an enormous spectrum. Products and companies in the consumer (and even enterprise) space would rise and fall in the time it would take to execute one government contract. There was no better way to get laughed out of a pitch meeting than to name government as your customer.

Today, the vast majority of the venture dollars still go elsewhere, but the](http://www.gartner.com/newsroom/id/2518815) is getting noticed. Entrepreneurs have noticed a chance to have an enormous impact on the one platform designed to serve us all, while building exciting, profitable businesses. VCs have noticed the glimmers of change that can signal opportunity in an ecosystem, possibly even disruptive change, to use a favorite VC adjective. The public has noticed that interfaces to government can be simple, beautiful, and easy to use, even if they aren’t consistently. Yet.

What are some of these signals that change is afoot?  Here are a few:

  • When we launched the first civic startup accelerator in 2012, most VCs told us no one would apply. We got 235 applications that first year alone.
  • Superstars Michelle Lee and Marcin Wichary left Google (in 2012 and 2013 respectively) to “code for America” for a year through the Fellowship program. Michelle continued her work with the City of Philadelphia by co-founding the civic startup Textizen, which is now connecting dozens of governments with their citizens through text message.
  • Textizen was one of the first of five companies born out of CfA’s work with local governments through our Fellowship program and incubated at Code for America. All five are alive, doing well, and transforming the local government vendor ecosystem.
  • CfA Accelerator alumni MindMixer just announced a $17M follow-on round of financing bringing its total raised to date to $23M and Captricity recently announced it’s $10M financing round lead by Atlas VC and Social+Capital. Friend of CfA, OpenGov, also just successfully raised $15M led by Andressen Horowitz.
  • The President of the United States rarely speaks about such wonky issues as IT procurement, but this president, in the wake of healthcare.gov, was moved to say, “what we probably needed to do on the front end was to blow up how we procure for IT.” In fact, he said a fair bit more than that, which you can read here.
  • Speaking of the President, he followed these statements with the creation of the](http://www.washingtonpost.com/blogs/the-switch/wp/2014/08/11/white-house-launches-u-s-digital-service-with-healthcare-gov-fixer-at-the-helm/) (the office I went to the White House to help start), led by Mikey Dickerson, one of the leads of the healthcare.gov rescue.
  • The Office of Federal Procurement Policy issued the TechFAR Handbook, describing “how to use contractors to support an iterative, customer-driven software development process, as is routinely done in the private sector.” This was guidance supported the first canonical document of the USDS, the playbook for creating digital services, which some have said “should certainly serve as a model, not just for the government, but for any organization, small or large, that is building an online presence.”
  • You know the establishment is seeing the same view when Harvard Business School launches a course on Public Entrepreneurship, taught by Mitch Weiss, former chief of staff to former Boston Mayor Tom Menino.

I could go on. But the point is that enough people now believe that the problems created by outdated government technology and processes are both fixable and worth fixing. And while a non-profit like Code for America, and new agencies like the U.S. Digital Service, are helping change the rules of the game, we’ll need hundreds of startups eager to play the new game if we want to reap the benefits of 21st century technology in the service of the American people.

We (and here I mean, “we the people”) have a lot of people to thank for this sea change. Ron himself, the Managing Partner of the Govtech Fund, is chief among them.

Ron was first introduced to Code for America through a mutual friend, who thought he might be a helpful advisor, both to me in starting the organization and to our first teams of fellows, who had recently arrived as we got the program going. He mentored the Boston team that year and got his own taste of the joys and frustrations of working in a government context.

The entrepreneurial spirit of that first year, inspired by Ron (who is himself a serial entrepreneur), by our incredibly resourceful partners in the Mayor’s Office of New Urban Mechanics, and by a killer team of fellows, led to discussions about how startups might play an important role in changing the government technology game. At the center of these discussions were Abhi Nemani (now the Chief Data Officer for the City of Los Angeles), CfA founding board member Tim O’Reilly, and, of course, Ron.

Ron and Abhi, with help from Tim, launched the first CfA Accelerator in 2012 to see if there was any “there there” with this whole civic startups idea. There turned out to be a lot of “there there,” and it turned into a lot of hard work, talking with startups all over the country and understanding the barriers unique to this market. In the course of making it all make sense, Ron became convinced the government market wasn’t just a place to do good, but also a place to do quite well. And when he decided to launch the Govtech fund, he chose to do both.

If the last few years have taught us anything, it’s that it’s not just government and the public who will need to change if we are to get to 21st century government that works for the people, by the people. The vendor ecosystem have a significant role to play as well. The Govtech Fund will partner closely with the work of our Companies team, led by serial entrepreneur and author Lane Becker, whose role at CfA has evolved from leading the accelerator program to leading the charge to reshape the vendor ecosystem. It’s no small task, but with the Govtech Fund (and others) starting to invest in the space, change is coming. And the incumbents are starting to notice.

Congratulations, Ron and partners, on this important launch!