civic innovation, civic data, knight foundation, knight A visual map of open government projects and their relationship strength to community action focused projects. KNIGHT FOUNDATION

The Knight Foundation released a civic technology report this week, believed to be one of the first of its kind. The data offers insights into 11 areas of civic innovation, revealing that more than $430 million was invested between January 2011 and May 2013.

The foundation, a civic technology group, counts its own investments in that total, investing $25 million in civic technology projects last year. While the report showcases a variety of significant data — such as specific civic technology growth, top investors for civic projects and trends — perhaps its most notable contribution is a detailed chronicle of an industry that has mainly been described through anecdotal observations or case-specific coverage of projects and partnerships.

“It’s been very opaque, quite honestly, to understand what type of investment and activity is going on in this landscape,” said report co-author Jon Sotsky, the Knight Foundation’s director of strategy and assessment.

Sotsky, along with Mayur Patel, the report’s other co-author, identified 11 areas, or “clusters,” of civic innovation projects within the emerging civic technology industry. These include civic crowdfunding, community organizing, information crowd sourcing, neighborhood forums, peer-to-peer sharing, data access and transparency, data utility, public decision-making, resident feedback, visualization, and mapping and voting (click here for the full report).

Most Invested Civic Innovation Clusters

Out of the clusters, peer-to-peer sharing — projects that promote resident-driven sharing of goods and services — far outweighed all others in the way of investments, coming in at $234 million. In second place was neighborhood forums at $41 million, while information crowdsourcing drew $38 million.

Graph of Most Invested Clusters

Sotsky hypothesized that results could be evidence of a new consumerism, as well as a shift toward a sharing economy, where people take advantage of underutilized goods and services by sharing items like cars and lodging.

“Because this underlying shift is occurring, I think a lot of private capital has entered because they see an opportunity to monetize that,” Sotsky said. “Private capital flocks to those opportunities where they think profit exists.”

A quick glance at the top four clusters (Peer-to-Peer Sharing, Neighborhood Forums, Information Crowdsourcing and Community Organizing) shows social interaction has been a dominant characteristic in drawing financial support.

Asked about the link, Sotsky confirmed the relationship but said more exploration is needed.

“I think that investors are attracted to organizations that have a strong social element. What’s left unclear,” he said, “is if they’re really a more viable market opportunity or not.”

The report found that 84 percent of all investment capital came from private sources (versus grants and government funding). That large percentage was an unexpected finding, Sotsky said, considering the public nature of the projects.

“It’s really been dominated thus far, by private capital.” he said. “And we understood that it would be a mix but I guess we didn’t realize how weighted it would be towards private investment.”

Strong and Steady Growth

Growth is important in any industry, but especially an emerging one. For investors considering taking part in the new civic innovation economy, growth stats are also a way to gauge potential return on investment. The good news here is that civic innovation is seeing large gains based on the number of organizations and companies popping up. With analysis dating back to 2000, the report concludes that the number of new startups in the civic tech space has approximately doubled every four years, adding 16 new companies in 2000, 34 in 2004, 82 in 2008, and 191 in 2012.

“There’s been consistent and sizable growth of new civic tech organizations being formed over time,” Sotsky said.

Mirroring the growth in investment dollars, the sector with most significant growth has been peer-to-peer sharing. As a note, when considering cluster investment dollars and growth trends, Sotsky said that while the average organization in civic innovation is relatively young (the median age of a company is between two and seven-and-a-half years) the age of a company didn’t appear to have any connection with its ability to gain investment or its ability to grow.

Below is a list of the clusters, from fastest growth to slowest.

List of Fastest Growing Innovation Clusters

Practical Uses and Next Steps

Investors were also categorized and broken down into groups. Google took the top spot in the corporate investment category at $31.6 million. The Omidyar Network was first in the financial investor category at $58.8 million, and among individual investors, celebrity Ashton Kutcher led the way with $16.2 million. The Knight Foundation showed itself to be the top investor for foundations at $25 million.

Sotsky said Knight hopes the new data will be used by potential investors, municipal leaders, and civic tech organizations to increase funding and collaboration within the small yet budding industry of civic technology.

Examples of collaboration, Sotsky said, include cities creating investment relationships for civic IT projects, investors having a list of possible co-investors, and civic IT startups having a new list of potential investors when launching projects and company development.

For new investors to civic innovation with less capital, Sotsky said, the data seems to indicate that there is a great opportunity in some of the lesser funded clusters. Specifically, he pointed to public decision-making, voting, and resident feedback, since there are few dominant players in the market now, as well as low investment buy-in, and ample room for growth.

Though this is Knight’s first comprehensive analysis of the civic innovation industry, Sotsky said the team is looking for input to feed into future editions.

Click here for the Knight Foundation's digitally interactive presentation.

Graph data courtesy of the Knight Foundation.

Government Technology Staff Writer Jason Shueh Jason Shueh  |  Staff Writer

Jason Shueh is a staff writer for Government Technology magazine. His articles and writing have covered numerous subjects, from minute happenings to massive trends. Born in the San Francisco Bay Area, Shueh grew up in the east bay and Napa Valley, where his family is based. His writing has been published previously in the Tahoe Daily Tribune, Amazon Publishing, Bike Magazine, Diablo Magazine, The Sierra Sun, Nevada Appeal, The Union and the North Lake Tahoe Bonanza.