Government · Startups

Will the Government buy from startups?

Nate Holbrook Founder / CEO at Lilac

November 2nd, 2015

Currently working on an early stage GovTech startup & curious to hear from others what are the chances that the government will buy into my startup? What are some tips/suggestions to ensure that a deal goes through?



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Dwayne Johnson Social Alchemist - I build equitable, prosperous, sustainable smart cities and regions.

November 2nd, 2015

Many variables would impact the decision, but I'd suggest the odds are against it. No matter how good your solution, the government risks you going out of business and being stuck with something they can't support, wasting their time and the tax payer's money. 

Lower cost items (less than 2-5K) might avoid the procurement process, which isn't fast and often has requirements like being in business for 2+ years and carrying $1,000,000+ insurance covering the work/product/service. 

Put yourself on the other side of the desk.... would you want to be on the front page of the local paper because you bought goods from a startup that didn't deliver?

Logan Kleier

November 2nd, 2015

It depends.

Some govt. managers like to buy from established companies and are fearful of startups. I recommend that you get to know the manager that is using your service and understand whether or not they like working with startups. 

Also, your service may require an RFP and that means that you're competing against potentially much larger, more established companies for the business. It also means that you have to wait usually 6 months to win and complete an RFP process.

I recommend that if you want to work with government, you identify your buyer who will also serve as your champion. Once you do that, you work with them to figure out how you're going to be able to sell to them (through an approved reseller, a sole source contract, or competitive procurement (RFP)). 

Most government agencies have approved IT/software resellers that they can buy any service or product from. The challenge will be getting the account manager for that reseller to make you an approved vendor. However, once you have a sale for them, they'll be much more willing to talk with you. Also, you will need your buyer to advocate for you with that reseller. In other words, they will need to call the reseller and ask them to make you an approved vendor. 

Alexander Ross Head of Business Development at Verifide

November 2nd, 2015

I have a family member who's senior at a large US municipality (I'd rather not mention where). But feel free to ping me at alex@presentista.com maybe with a little more specifics and I'd be more than happy to bounce it off of him.

Overall, the stereotype of being slow moving and conservative can often be true- but there are managers inside government who are even more likely to turn to a cloud or other solution because of this. For example, developing mobile apps internally is a sticking point so solutions that can help them are often a no-brainer.

Do remember that most solutions will go through a proposal process. "Sole source" contracts are totally ok in the corporate arena but generally of questionable ethics in a lot of goverment processes.

Anton Yakovlev Founder of four successful businesses on two continents who can help you do the same

November 2nd, 2015

I have some experience in Russian GovTech. I hope it is different from those in other countries, as in Russia it is always a question of offering a bribe to the ight guy, and no matter if you are a startup or not. 

As for demand in innovation governments of all countries are probably the most demanding customers. But there is always a risk of using a new technology, that governments rarely can afford. Therefore, I think, startups cannot effectively sell to governments. In case they can they are not startups, but rather they are already established businesses.


Taj Sateesh CEO at Sphinx Resources--The Preferred Recruitment Partners in Hi-Technology R&D & Manufacturing

November 2nd, 2015

Hi Nate Holbrook,
What did you mean by 'the government will buy into my startup?'
Did you mean DOING BUSINESS with Startups [which everyone above have addressed]  OR INVESTING into startups?

TS

Melissa Skehan Passionate, Mission Driven, Strategy, Growth & Impact Leader - Founder, CEO, President, Executive Management

November 2nd, 2015

Govtech or any public sector sales/adoption process is inherently different from B2B or B2C in many regards.  Its critical to be able to explain the value proposition in terns that are meaningful to the decision maker, but its as crtical if not more so to also be able to "sell" to the multitude of influencers.  Unlike in many business or consumer purchase decisions, where the decision maker is also the end user, in public procurement that is rarely the case - or at least not in a vacuum.  In competing for dollars in the public sector, you have to know exactly which budget line item will be used to purchase your giids or services.  Further, you have to know what or who else is competitive for those dollars (often an established "incumbent" even if your idea is new.  The established incumbent could even be "do nothing" - because its safer.  If "your" dollars (or those that would be used to procure your goods/services have historically been spent elsewhere - well then you will likely have to find a way to convince a whole team of people to go in a new direction and that can be hard.  Its not all lost however because if you find some champions, they will likely be champions for the long haul as long as your product or service delivers.  Since people in the government sector often move around to other public sector organizations, the influence of these champions can be widespread!  Professional organizations of public agency procurement officials is a great place to find champions. Relationships.  Relationships. Relationships. I am always intrigued by this sector.  Its ripe for more change and now more than ever, there is funding for great solutions.

Jason T. Ray

November 2nd, 2015

Nate and Others - I spent a few in government acquisitions for the Navy and am happy to chat about the intricacies of doing business with DoD/FEDGov. Feel free to send me an email at Jason@jtrassoc.com and we can set up a time to discuss your specific situation.

Stephen PMP Project Management Professional

November 3rd, 2015

I am in the Federal Gov't and have been the Technical Evaluation Panel Chairperson (the guy that tells the contracting officers which businesses proposal I want to accept on behalf of the gov't).  I also have a startup (who doesn't?!).  I can tell you that your quickest, but also your best long-term solution to your question is to become a subcontractor to a prime vendor.  Partner with a large firm who already does considerable business with the gov't (who also does what you do).  They need you too (for many reasons which I'm not going to get into here).  You can also be a sub to a sub who could be a great mentor for you in this space.  It's not easy, but the process pays off significantly if you remain diligent.  Good luck.