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Gov Tech Market Grows Amid Challenges of COVID-19 Pandemic

Six years of tracking the growing gov tech market have proven that not only is it a viable space for innovation and investment, but that companies built to serve government have become essential.

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<a href="https://www.shutterstock.com/image-photo/stock-market-forex-trading-graph-candlestick-416888221" target="_blank">Shutterstock/Phongphan</a>
As with every facet of our coverage over the past year, our annual GT100 list has been affected and informed by the global pandemic. But similarly, the trends and issues Government Technology readers care about today feature several through lines that pre-date the pandemic and will also outlive it.  

Six years ago, we set out to define a new market segment by annually benchmarking 100 companies that were starting to unlock solutions to government problems using innovative technology. These aren’t the giant incumbent players that snag the lion’s share of large government contracts. They are newer entrants to the scene that started small and have gone on to prove that state and local governments do indeed want to experiment with new ideas and that it can in fact be a profitable business model.  

Skepticism on the part of the investment community has begun to fade as the viability of the gov tech market has increasingly proven itself. Can companies make a profit focusing on government? It turns out the answer is yes. Nearly 500 investors in this year’s GT100 companies certainly seem to think so.  

2016 was the first year we published the GT100. Venture funding for that inaugural group totaled just over $1 billion at the time. The average age of a 2016 GT100 company was nine years, and the group boasted 23 acquisitions to date among them.  

Fast forward to 2021, version 6.0, which we unveil for the first time in this issue. Companies on the list have matured alongside the list itself, now averaging 14 years old. Other notable numbers have jumped too: Companies on the 2021 list have raised a combined $3.2 billion. And another indicator that the gov tech market is coming into its own? The number of acquisitions for the 2021 list is 199, more than eight times the total from the 2016 list.  

When planning our editorial coverage for this issue, we wondered what, if any, impact COVID-19 had on the maturing marketplace captured in the GT100. The title of our feature story for 2021, Essential: The 2021 GovTech 100, should resolve any uncertainty on that front.  

2020 served as a force multiplier for digital transformation in state and local government. Services were migrated online by necessity and many government norms were turned on their heads. Work-at-home capabilities got a massive boost, bringing previous productivity skeptics along for the ride. Citizen engagement has never been more important as residents turned to trusted local authorities to guide them through uncertain times. Companies on the GT100 list smartly pivoted to handle dramatic new demands for services online.  

The last few years have seen an uptick in government tapping into sentiment-mining tools to better track trending issues and residents’ feelings about them and use social media and other outreach tools to respond. GT100 company Zencity saw a major increase in local government customers due to COVID-19. The tool helped municipalities track whether citizens understood things like the latest local guidance about masks and business operations, allowing them to quickly shift communications tactics to combat misinformation gaining momentum. And Zencity experienced something many experts on tech use in government have noted: The extenuating circumstances of the pandemic led many to skip the small pilot project that often precedes a bigger contract.  

Noting the trajectory of service providers toward the digital, Granicus CEO Mark Hynes viewed government agencies in the U.S. as being on a similar, inevitable path. “It’s really a market adoption curve question, and COVID has bent that adoption curve up dramatically.”

Read more about these companies and check out the full 2021 GT 100 online at govtech.com/100.

Noelle Knell has been the editor of Government Technology magazine for e.Republic since 2015. She has more than two decades of writing and editing experience, covering public projects, transportation, business and technology. A California native, she has worked in both state and local government, and is a graduate of the University of California, Davis, with majors in political science and American history. She can be reached via email and on Twitter.
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