Another gov tech initial public offering, in fact, is hardly out of the question. That would follow the $493 million raised in September when Via Transportation went public, joining a tiny club.
The summer brought news of perhaps the largest gov tech deal ever — EQT and CPP Investments buying the 25-year-old NEOGOV, which focuses on HR and compliance, in a transaction reportedly worth $3 billion.
That deal should close late this year, Scott Jensen, NEOGOV’s chief marketing officer, told Government Technology.
And he wouldn’t rule out an initial public offering for his company, either, especially as more state and local agencies move to the cloud and embrace artificial intelligence.
“At current growth rates for both revenue and profits, an IPO is a reasonable outcome,” he said, though he doesn’t expect one in the immediate future.
Such a healthy market theoretically means more tech options for state and local public agencies seeking to bring their systems up to speed with the mobile, digital, data-obsessed and always-online nature of life these days.
A quick look at recent developments in the space, combined with comments from gov tech executives, offers a look at what’s to come in this sector of the economy into 2026.
Certain warning signs are starting to flash about problems that eventually could impact — or slow — the growth of gov tech companies, but the mood remains optimistic among suppliers and investors.
A glimpse at earnings — and most gov tech suppliers are privately held, releasing little financial data — shows significant growth as the year ticks down.
Envisio, a 13-year-old company that sells performance management software, reported a 110 percent increase in new bookings for the 12 months ending in July, along with a 40 percent bump in new customers.
Those summary numbers, as good as they look, also disguise what CEO Craig Ross called a “little bit of a slowdown in” the first quarter because of “uncertainty around funding and a potential economic slowdown,” he told Government Technology.
Uncertainty persists, especially as cutbacks at the federal level — money that often finds its way to states, cities, counties and other lower-level governments — continue. With fewer federal grants and other sources of cash, state and local governments have to cut and revise their own budgets.
“I think many organizations are still a little anxious as to how everything will settle, and this may result in a little more caution for some as we head into 2026,” Ross said, though he doubted any “significant impact” from reduced funding.
Ross added a thought that has become increasingly common among gov tech suppliers: Less funding equals more focus on efficiency and transparency, values that Envisio and other firms in this space are prepared to deliver to clients. Doing more with less presents opportunity for software providers as they help public agencies modernize.
A year ago, Envisio inked a priority-based budgeting partnership with gov tech giant Tyler Technologies, one of gov tech's publicly traded companies. The Texas-based business posted a 10.2 percent year-over-year revenue increase in the second quarter, to $596.1 million.
Similar to Ross, Tyler CEO H. Lynn Moore could report only non-material “scattered delays or cancellations” due to federal funding cuts, according to comments he made to investors.
In fact, based on conversations at one of the company’s conferences — an event in May that attracted about 7,000 participants — the company heard little evidence that federal Department of Government Efficiency and other cuts, or other “macro factors,” will harm spending with Tyler, he said.
Moore highlighted Tyler’s recent $11 million supervision software contract with the Arizona Supreme Court — the company’s largest software-as-a-service deal of the quarter — as one factor behind the Q2 growth.
More states have bids out for statewide court management contracts, according to an analyst on the call — a potential foreshadowing of where more gov tech business might originate in the coming years.
“We expect some large RFPs to be coming out over the next several quarters. We expect to be extremely competitive in those deals,” Moore said before striking a more cautious note. “The timing of those is always a little bit uncertain. But even if RFPs were to be announced in the next quarter, say, it would take some time to get through the process and get those signed.”
He also highlighted public safety, where consolidated dispatch and records management stand as some of the popular offerings. Public safety, in fact, drove many of the deals in the wider gov tech space in recent months, and it shows no signs of slowing down, even as controversy attaches to new tools for law enforcement.
For instance, First Due, which sells software to fire, EMS and other agencies, recently raised $355 million after nine years in business, thanks to private equity.
More recently, Axon, probably best known for its body cameras, bought Prepared, a young company dedicated to bringing more AI, translation and real-time data to emergency dispatch centers.
Prepared had raised more than $130 million since it launched in 2019. This new deal reportedly is worth some $800 million.
Both numbers reflect how much activity is taking place to bring emergency dispatching and call centers further into the 21st century, especially as staffing shortages hamper response times.
“Axon has been innovating in this space for years, including bringing dispatch and CAD capabilities to market,” an Axon spokesperson told Government Technology via email. “A little over a year ago, we chose to pause those efforts so we could step back, listen, and learn how to better serve our customers. This acquisition is the next step in delivering on that promise.”
As that happens, private equity keeps fueling gov tech deals.
The NEOGOV acquisition, for instance, involves one private equity firm buying the company from others.
And at roughly the same time, Arlington Capital Partners, a private equity (PE) firm that specializes in government, bought license, tax and compliance technology supplier GovOS, combined it with two other firms and renamed the whole thing Neumo.
Private equity, though, is in a slowdown, with quarterly returns reportedly shrinking as relatively high interest rates make capital more expensive than it was just a few years ago. Federal policy gets part of the blame in an analysis of the PE situation by consulting and accounting firm EY.
“Since the beginning of April and the uncertainty around tariffs, significant percentages of investors have renegotiated, withdrawn or postponed transactions — 30 percent of firms reported having to renegotiate deals based on fluctuations in underlying valuation metrics in Q2, and just over a third say their portfolio companies have done the same,” the analysis states.
So far, though, few signs of those problems have appeared in the gov tech industry, even as President Donald Trump, responding to the PE slowdown, looks to expand mainstream investment in private equity.
Indeed, recent signs about gov tech investment still encourage optimism.
That includes news from September that private equity firm Veritas Capital raised $14.4 billion to invest in such areas as higher education and government technology. The new fund came in 35 percent higher than the previous fund, which closed in 2022.
