Policymakers love tech startups - but are they buying from the innovators?

Policymakers are keen to talk up the potential of the UK, but when it comes to handing out contracts for IT projects how good is government at connecting (and doing business) with early-technology businesses?

When I try contacting Alexander de Carvalho for the first time, the call doesn't go through. Mysteriously, however, my number shows up on his phone and he when he sees it, he rings me back. "We're based in Whitehall beside the Ministry of Defence building. It may be that the signal was disrupted in some way," he suggests.

Close proximity to the MOD may or may not be unhelpful when it comes to maintaining smooth mobile communications, but otherwise, it's not a bad location for a business - Public -  that aims to connect digital startups with potential buyers in the public sector. Established in 2017 by de Carvalho and partner Daniel Korski, Public operates as an investment fund and a provider of accelerator services for young companies that have the potential to sell their products and services to government. And just to emphasise its public-sector focus, the company this year opened co-working space in the heart of Whitehall. If all goes according to plan, it will become a natural home for "govtech" innovators. 

But is the public sector an attractive market for relatively young companies that don't have the resources, credibility and marketing muscle of an IBM or Microsoft?  On the face of it, the answer to that question should be yes. For one thing, the government is keen not only to talk up the sector but also to provide financial support. Witness Theresa May's attendance at this year's London Tech Week, accompanied by a pledge to invest £153 million in quantum computing.

Meanwhile, public sector bodies at national and local level are keen to cut costs while also, if possible, improving services to taxpayers. James Hirst is co-founder of Tyk, a company that has built APIs that allow Britain's courts to take traffic offence pleas online. As he sees it, there is clear demand on the part of policymakers to seek out technologies that can help deliver on that policy imperative. "Our interactions with the public sector suggest that government is looking for faster, more efficient and holistic ways to engage with the public," he says.

But selling to public sector bodies isn't necessarily straightforward, not least because there are a lot of them, all with their own policy objectives and buying processes. So how does a startup establish where the demand is? Even when you narrow it down to one segment of government such as healthcare, there are hundreds of trusts and agencies making buying decisions.

And pinpointing potential customers isn't the only problem. Mikkel Brun is co-founder of Tradeshift, a company that successfully won a contract to supply electronic invoicing solutions to SBS, an NHS shared service provider. To secure the deal, his company had to demonstrate compliance with NHS standards in areas such as data security. "It's a process that can be time-consuming. But if you make yourself available, you have to go through all the steps," says Brun.

And as James Hirst observes the compliance process can represent something of a leap in the dark. "When you're selling to a large organisation, you have to provide evidence that you can comply with their guidelines. And it's hard to know what you need before you start the process." 

Preparing to go public

These are some of the problems that Public has set itself the task of addressing. Co-founder Daniel Korski - a former advisor to David Cameron - has strong connections with government, while de Carvalho comes from a tech startup and finance background. Between them, they believe they can bridge the gap between early-stage companies and public sector buyers. 

So what does that mean in practice? Public runs what de Carvalho describes as bespoke Govtech accelerator programmes. Tech businesses joining one of the cohorts will receive advice on buying trends within the government sector and help to mould their products accordingly. Crucially, Public also helps businesses to address the compliance issues they are likely to come across.

The programme is tailored to individual companies. Essentially this means looking at the circumstances of a particular business and providing targeted help. "For a scaleup, we might help them find a chairman. A startup might need help building solution architecture that will scale up," says de Carvalho.   

Although Public doesn't have any kind of official relationship with government, it has—de Carvalho says—informal relationships with officials. These links help startups working under the Public umbrella to understand the requirements of policymakers and buyers. And there have been success stories. De Carvahlo cites recruitment platform Adzuna, which is providing smart services to Britain's Job Centres. 

An Olympian task

Public is certainly not the only game in town when it comes to forging links between innovators and government. Over to the East of London, the Plexal innovation centre, based in the 2012 Olympic Park is also in the business of helping startups and scaleups make connections.  

Like Public, Plexal offers co-working space and accelerator programmes to early-stage companies and as Managing Director Andrew Roughan explains, the underlying mission of the centre is to encourage the development of technologies that deliver on an agenda of beneficial social change in line with Olympic legacy objectives. As things stand, Plexal focuses on three broad strands - namely inclusivity, mobility and cybersecurity. 

In terms of connecting innovators with partners and buyers, Plexal has a much broader remit than Public. With partners that include BT, Deloitte, Sega and Ford—all with an on-site presence—the corporate world is well represented. Academic institutions, such as Queen's University Belfast and University College London have also established labs at the centre. This provides innovators using the co-working space with a broad range of industry connections.

Taking the challenge 

And there is also scope to work closely with public sector bodies through a range of "challenges" aimed at solving very specific problems. For instance, Plexal recently staged a challenge designed to encourage the development of technologies that might reduce the impact of roadworks on traffic flow in London, with Transport for London (TFL) as one of the partners. On completion of the trial, four companies—Mobilized Construction, Route Reports, Immense Simulation and SAM—are in negotiations with TFL.

Building relationships with regulators is also part of the Plexal offer. For instance, the centre has opened up the Olympic Park for trials of e-scooters operated by U.S. company Bird. Common in many European cities, electric scooters are illegal on U.K. roads and as Mobility Innovation Director Francesca Lavey explains, the trial has the potential, at least, to bring about regulatory change. "With Bird we are demonstrating how e-scooters can be deployed in a safe experiment," she says.  

The appetite question

But here's the thing. Government has traditionally gravitated towards the devils it knows--Microsoft, IBM, etc.—to manage IT projects. Are public sector buyers now more willing to take a risk on innovative solutions supplied by smaller tech companies. De Carvalho says there has been a sea change, partly driven by the cloud. "The big IT companies can provide the cloud architecture but that leaves scope for innovators to offer point solutions," he says. 

That doesn't mean that government buyers are constantly on the hunt for the latest tech novelty.  

Chris Edson is co-founder of Ourpath, an app based solution that is currently being prescribed by GPs to help diabetics change their lifestyles and make better health choices. In his experience, buyers in the public sector are focused on improving outcomes and delivering pre-defined objectives rather than "innovation" per se. "It's difficult to sell something entirely new," he says.

In Ourpath's case, the company was offering a tech-driven version of something that the NHS was already doing in the form of diabetes prevention programmes. An alumnus of the NHS Testbed accelerator, Ourpath succeeded because it demonstrated that its subscription-based service could deliver diabetes prevention more effectively.

Ultimately, success in selling to the public sector probably isn't too different from winning business from large corporates or SMEs. It's a case of understanding what the client needs while also being able to adapt to their processes and compliance requirements. In that respect, joining an accelerator or taking part in a challenge can play a role in helping businesses stake out the territory.