Startups working with government agencies have had to pivot in response to the economic and health crises of recent months. Going forward, their innovation paired with public-sector mission will be critical.
Startups serving government have come with a compelling value proposition almost every time: better, faster, cheaper ways to do the public’s business. Their pitches were often buoyed by the momentum of early wins elsewhere, the boundless energy of charismatic founders dedicated to game-changing breakthroughs, and deep-pocketed funders that provided a sufficient runway to prove out the new business model and attendant technology (or vice versa), that ultimately turned skeptics into believers that a new kind of government was becoming possible.
The startup narrative was a source of hope and aspiration in government for years. That is, until March 2020, when the magnitude of the global change wrought by the novel coronavirus became clearer to a watching (but self-isolated) world. Beyond the human toll, job losses in the U.S. alone were counted in the tens of millions and the economic rescue plans fashioned in Congress began in the trillions of dollars. The world had changed in ways that made the future largely unfathomable. And startups, those nimble self-styled agents of change, were among the displaced.
Startup company responses to the conjoined health and economic crises in the face of COVID-19 took one of three forms.
Pivot: Established startups have been able to reposition themselves to help public agencies support remote work, manage COVID-19 resources and spin up specialized service centers. Several companies in particular show promise in speeding delivery — including EVA, an infrastructure company that supports large-scale delivery drones that could have an important role in getting COVID-19 tests to the lab and blood plasma to where it’s needed. On the ground, Coord has made some of its services available to cities for free in a frenetic scramble to adapt unused parking spots to handle surges in deliveries as needs change in public health and safety. Perhaps most strikingly, wastewater epidemiology startup Biobot Analytics has launched a program in collaboration with MIT, Harvard, and Brigham and Women’s Hospital to solicit and analyze sewage samples from treatment facilities across the U.S. to test for the virus and measure the scope of the outbreak.
Capitulate: Bird and Lime, once two darlings among urban transit options, introduced fleets of sharable bikes and scooters to cities across the country until the funding ran dry. At the end of March, Bird laid off over 400 of its employees and a Lime investor said companies should expect to “survive on a budget of zero.” Even gov tech startups with multiyear government contracts acknowledge government agreements are a double-edged sword. On one hand, a contract provides stability. On the other, government is not universally known as a prompt payer. Incumbent players also concede that new customer development and sales in the public sector are likely non-starters. Moreover, with 30 million startups in the country, it remains unclear whether the federal rescue packages will be sufficient to shore up gov tech or civic tech companies. Let’s also not forget the distinct possibility that struggling startups are very likely to be targets of acquisition efforts — of the companies themselves, their intellectual property or their key talent.
Reboot: Government needs startups that treat the public’s business as more than just another vertical. A shared commitment to a shared mission is a rare, valuable thing. Public agencies are ultimately the responsible parties in meeting fiduciary obligations for moving money and permissions under the law. But startups often bring creativity and flexibility to the execution of plans developed together with public authorities. These young, nimble and robust companies tend to wake the innovation within public service, helping it be better than it was while increasing competence, confidence and capacity.
In a post-coronavirus world — or in a world between the novel coronavirus and whatever the next global challenge is — neither government nor the private sector is equipped to go it alone. Nor is there a need for that. If we are deliberate and intentional, we have the chance to combine private-sector discipline and innovation with public-sector mission to create a world in which we can all live, thrive and figure out what the next new normal is.
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