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To Benchmark Gov-Tech Startups, Investment Firm Surveys the Field

Urban.Us wants to paint a clearer picture of the gov-tech startup ecosystem. So they're going straight to the source: the companies that make it up.

by / August 11, 2017

There is no shortage on the Internet of advice on building a tech startup, or investing in one, or achieving product/market fit, or benchmarking metrics. Medium, LinkedIn, Forbes — they’re overflowing with advice.

But for those niche companies that focus on selling to government? Not so much.

Recently, when the urban tech venture capital firm Urban.Us set out to put the financials of a gov-tech company going public — ShotSpotter — into context, they ran into that problem head on. According to Stonly Baptiste, an Urban.Us partner, the firm could find benchmarks of enough companies to create a workable comparison, but they struggled to find truly comparable companies.

“While digging in on how they built their business and where they are at IPO, the first insight was that there wasn’t much data available to benchmark against,” Baptiste told Government Technology via text.* “[Business to government] sales has nuances, so you can’t just compare to enterprise or [small and medium business] sales, for example.”

Among the nuances: Contracts are more onerous, sales cycles are longer, hardware and software environments tend to be on the older side — and that’s not to consider the culture differences that can exist in government.

So, to help people on all sides of the government technology equation better understand the companies in the space, Urban.Us is looking to create a better benchmark. At the moment, the firm is conducting an online survey of software-as-a-service startups that sell to government. The plan is to veil the raw data and instead release an aggregated analysis based on how people respond.

The questions are varied: Some ask about basic business metrics like average contract value and employee count, while others pin down the exact market segments the companies focus on and the avenues through which they sell. Once analyzed, the firm hopes to start addressing questions like how much various kinds of government pay for different services, what procurement channels are most often used and what technology trends have momentum.

“We’re meeting more and more teams and individuals interested in building teams in [business-to-government sales], asking these questions around where their expectations should be and what approaches they should try,” Baptiste said.

Baptiste also said he thinks the information could be useful to basically everyone who has a stake in the space: Investors like him, vendors and government officials. He pointed to a recent article in Wired covering the growing use of the secretive company Palantir’s technology at local law enforcement agencies. The article showed that Palantir software has given police departments unprecedented access to disparate data about individuals, which has led at times to sensitive data leaking to people who shouldn’t have been able to see it, and in some cases, users abusing the system to look up information about romantic interests.

“[Business-to-government] sales is a bit of a black box,” Baptiste said. “A recent article on Palantir showed how murky that box can get. So there are some public repercussions to the lack of transparency.”

Additionally, he said, government tech and procurement employees might find the information useful for things like understanding what levels are using what solutions for which problems. Having benchmarks might give them some ideas about what metrics to look at when evaluating a potential startup as a partner.

“Knowing who is doing well and what the behavior is from other [governments] might help [governments] adjust their procuring or piloting strategies,” he said.

For vendors and investors, the data’s utility is a bit more straightforward: Investors need to know what success looks like, and companies need information about how similar businesses operate.

The survey is here.

*Editor's note: The interview with Baptiste was conducted via text message because Baptiste was overseas and a poor phone connection made it difficult to conduct a traditional phone interview.

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Ben Miller Associate Editor of GT Data and Business

Ben Miller is the associate editor of data and business for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.

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