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Gov Tech Biz Quarterly Roundup: Q4 2023 With Jeff Cook

A big final quarter brought 2023 to the record books for gov tech business deals, with notable transactions involving Civica, Civic Utility and Avenu Insights & Analytics, according to market expert Jeff Cook.

Closeup on businessman holding a card with Q4 QUARTER 4 message, business concept image with soft focus background and vintage tone
Momentum in the gov tech market continued to build in Q4 2023, and an active quarter pushed 2023 to the second most active year on record. Our internal data suggests Q4 transaction volume of approximately $3.3 billion in Q4 2023, approximately $1 billion above the $2.3 billion in Q3 2023 and more than double the $1.5 billion in Q4 2022. The strong momentum brought 2023 transaction volume to $8.4 billion, $1 billion higher than the $7.4 billion in 2022 but still well below 2021’s $13.2 billion.

The quarter had a smaller number of large deals, such as Civica’s investment from Blackstone in the public administration space and Utility’s investment from GSV, PSG and Hicks Equity in the public safety space. Thematically, the market continued to trend back toward private equity platform deals and away from the strategic tuck-in deals that characterized much of the activity in the first half of 2023.

Looking ahead to 2024, we expect continued growth in activity (as detailed in my 2024 predictions column), with most of the activity driven by private equity.

The Big Deal(s)

Civica Receives Majority Investment from Blackstone

Why it Matters: The largest deal in Q4 2023 was Civica’s investment from Blackstone, one of the world’s largest private equity funds. Civica was previously owned by Partners Group. While not as well known in the U.S. gov tech market, Civica is the clear leader in gov tech in the U.K. and European markets, offering a wide portfolio of solutions to central and local governments, education and public health-care markets. Pattern recognition following large private equity investments would suggest that M&A will be a central theme for Civica’s next chapter, which may include more focused entry into the U.S. market. It’s a business to keep an eye on.

Utility Receives Strategic Growth Investment from GSV and PSG

Why it Matters: The other significant deal of the quarter happened in the public safety market. Utility, a provider of field solutions and digital evidence management software to law enforcement and first responders, received a strategic investment from GSV and PSG, two private equity firms who have invested together in the gov tech market through Catalis (formerly Government Brands). Utility’s primary offerings are body and in-car cameras and the software to manage and analyze that media, a fast-growing segment of the market driven by societal demands to bring more transparency and safety to emergency response. While that market is growing rapidly organically, we expect strategic M&A to become part of Utility’s growth in its next chapter.

Other Notable Transactions

Avenu Acquired by Arlington Capital Partners

Why it Matters: Yet another private equity transaction was Arlington Capital Partners’ acquisition of Avenu Insights & Analytics from private equity owner Mill Point. Avenu, a long-tenured provider of revenue recovery and administration solutions to local government, has been acquisitive, including transformational buys such as its purchase of Conduent’s local government business in 2018, and more recently of payments provider Interware Development. Arlington is a household name in gov tech private equity at the federal, state and local levels.

MCCi Acquires GovBuilt

Why it Matters: The first strategic deal this quarter was MCCi’s acquisition of GovBuilt, a provider of low-code/no-code case management tools for licensing, forms automation and permits. MCCi, a provider of process automation solutions and software to local government, is currently backed by private equity firm Century Park Capital. The GovBuilt platform adds to MCCi’s growing portfolio of software solutions (e.g., JustFOIA) and is at the center of an emerging theme in gov tech — the growth of low-code process automation tools that are helping automate the “long tail” of government processes unserved by off-the-shelf or packaged solutions.

CivicPlus Divests Monsido to Acquia

Why it Matters: It’s not often that we write about divestitures in this column, but a notable one happened this quarter through CivicPlus’ sale of its Monsido division to Acquia, a provider of digital experience management solutions. CivicPlus, backed by Insight Partners, acquired Monsido through its acquisition of Optimere in 2022. Monsido provides solutions to help improve web accessibility and comply with ADA requirements, a common theme this quarter as another business mentioned later in this column, Streamline, is (in part) growing based on the same theme.

Tyler Technologies Acquires ResourceX, ARInspect

Why it Matters: With the acquisitions of ResourceX and ARInspect, Tyler wins the award for most active acquirer in the market with three total in 2023. Thematically, Tyler’s acquisitions were centered around two trends we believe will continue to shape the market in the years ahead. The first is the growth of AI tools automating routine government processes, where the ARInspect acquisition sits thematically alongside its August acquisition of AI specialist CSI. The other theme is the increased adoption of specialized budgeting solutions, acquiring priority-based budgeting business ResourceX.

Streamline Raises $7.8 Million, Led by Arthur Ventures

Why it Matters: The special district segment of gov tech has been long known as a large opportunity but to date we have not seen a business that has identified and served the unique needs of that market segment. Enter Streamline. Streamline focuses on the special district market, providing website, accessibility, compliance and operational tools that are purpose-built for the fire, water, transportation and multitude of other districts in the market. Streamline has grown rapidly, and its $7.8 million round led by Arthur Ventures comes roughly 18 months after its $3 million seed round.

Prepared Raises $16 Million from Andreessen Horowitz

Why it Matters: Among the major themes within public safety is putting in place technologies that can get richer, more contextual data from the field to the hands of first responders so they can respond more effectively. There has been considerable growth capital that has been invested behind this theme (e.g., Carbyne, RapidSOS, etc.) and the latest in the series of these growth investments is Prepared’s $16 million round from Andreessen Horowitz, bringing its total funding to $30 million. Prepared provides multimedia and text to emergency dispatch, enabling more efficient and safer incident response.

Polimorphic Raises $5.6 Million

Why it Matters: The final deal of the quarter is Polimorphic’s $5.6 million seed round led by M13. Polimorphic provides AI-driven constituent relationship management software that helps citizens more easily find the information they need, reducing administrative burden on government workers.


GovTech Biz
Jeff Cook is a managing director at Shea & Co., an investment bank that has advised in more than 20 gov tech deals (investments and exits) in the past 5 years.