Governments have a responsibility to drive economic development and employment rates but one of the most significant untapped sources of economic growth is procurement, specifically procurement from startups, writes Kate Cornick.

Each time a trusted public sector organisation purchases from a startup, they provide that early-stage business with a valuable use case, sending a powerful signal to other purchasers that it’s ‘safe’ to buy from them. They also help that startup grow and create jobs.

But government procurement processes, which are designed to minimise risk, can make it difficult for the public sector to purchase solutions from startups, whether that’s because a provider is already “locked-in” or an over-specification of what’s required when going to market.

Startups are a solution to many government procurement opportunities, as well as those known challenges with unknown solutions. This is because startups view the world differently and can provide an answer which may not even be on the radar for a traditional provider.

A ‘safe’ place to do something new

Australia’s first GovTech accelerator, CivVic Labs, connects government challenges with startups who can solve them, acting as a bridge between two different worlds.

Government departments and agencies gain exposure to innovative tech solutions in a de-risked environment through the program.

It also exposes them to new ways of working and allows for a collaborative approach to solving the challenges at hand.

Startups will receive additional capital, which allows them to scale and hire more people, but also exposure to the government procurement process and the opportunity to build their network within the public sector.

The CivVic Labs process involves a government department or agency presenting a challenge to the startup ecosystem, inviting proposals for solutions from Victorian startups. The best ideas are refined in the pre-accelerator, with the most suitable solutions for the challenge moving to the accelerator phase.

During the accelerator, a minimum viable product or prototype is built with the backing of CivVic’s funding, mentors and resources. There is then the opportunity for the startup to secure up to $150,000 in investment to develop the solution as a market-ready product and impact change on a larger scale.

So far, four startups have successfully been paired with government challenges, and three of those have secured additional government contracts following completion of the accelerator.

The Department of Transport, for example, was looking for innovative ways to learn how Victorians use public transport. Understanding how Victorians use public transport is critical to meeting future demand, and the data needed to be used in a variety of ways such as planning new stations, safety and operational uses as well as providing customer information.

After posing the challenge to the CivVic cohort, the Department of Transport partnered with Victorian startup Envision Systems to develop a sensory monitoring platform. The solution aims to help the state overcome current public transport data silos and gaps.

Another positive outcome has been St Vincent’s Hospital, which partnered with data analytics startup Sky Ledge to develop a platform that proactively predicts the occurrence of preventable hospital-acquired conditions (HAC). Currently, 1 in 9 hospital admissions result in a potentially avoidable HAC, and a new way of thinking was needed to break through the problem.

Many in the public sector are currently missing opportunities to leverage the potential of dynamic technologies to solve challenges in the pre-commercial procurement space.

The benefits of bridging the middle ground

Despite the perception that governments around the world struggle with digital transformation, we know the public sector wants access to innovative thinking.

But the public sector procurement system is set-up to favour purchasing from larger, more established companies.

These businesses are not often working at the forefront of technology and can lack the ability to create innovative and often low-cost solutions.

And when they are, they are often white-labelling the work of startups, thereby excluding startups from the full investment and recognition that could change the trajectory of an early-stage business.

The goal of the GovTech accelerator is to remove the middle man and connect government and startups directly, opening pathways for both.

Despite not always speaking the same language, public servants and startups share a passion for solving society’s toughest problems. Their differences are, instead of keeping them apart, should be used to spark creativity and develop stronger solutions together.

*Dr Kate Cornick is the CEO of LaunchVic