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How Is Gov Tech Funding Looking as Pandemic Eases?

At the State of GovTech 2022 conference in Virginia, investors detail how the industry is growing and changing, how entrepreneurs can make money in the industry and how chances for innovation are still wide open.

The government technology investment market still favors the entrepreneur, according to investors at a recent conference — and they are bullish on the promise of innovation in this growing industry as the pandemic fades.

Those were among the main themes this week at the State of GovTech 2022 conference* in Arlington, Va. Financial types, company leaders, government officials and others talked about how much has happened since the pandemic — a time marked by digital invention and improvisation by public agencies — and much is yet to come in the next few years.

“It’s still very much a market in the very early stages,” said Jeffrey Stowell, managing partner at Royal Street Ventures, “and in favor of the entrepreneur.”

One illustrative area is cloud computing.

In the B2B enterprise world, cloud computing is already well established, and getting into that part of the technology business is extremely competitive. But many state and local public agencies are still relatively new to cloud technology, and that offers opportunities for companies aiming to sell such tools to governments, said Josh Rogers, senior vice president at Advantage Capital.

Of course, government can often move more slowly when it comes to adopting new tech — but it's no different with bigger corporations, the investors pointed out. That is among the hurdles that stand between a fresh idea for gov tech and investor confidence as a new year looms.

As well, the officials who make the tech decisions for government are not always as open to risk as their counterparts in the private sector, and that can present challenges to innovators and entrepreneurs. That said, things are changing quickly when it comes to governments getting more comfortable with tech.

“In two and a half years there will be citizens voting who never knew life without an iPhone,” Rogers said. “I hope it accelerates the innovation cycle.”

That point was echoed by Chris Massey an operating partner at Craft Ventures who focuses on government relations.

“We are seeing a new generation of government employee,” he said.

It is all but certain, he said, that digital progress made and sparked during the pandemic will not reverse, especially as federal funding promises to pay for more tech progress.

“You don’t put this back in the bottle,” Massey said. “I am highly bullish on the opportunities here.”

*e.Republic, the parent company of Government Technology, is an organizer of this conference.
Thad Rueter writes about the business of government technology. He covered local and state governments for newspapers in the Chicago area and Florida, as well as e-commerce, digital payments and related topics for various publications. He lives in Wisconsin.