How tech companies can win government contracts – a VC’s perspective

Alastair Mitchell, partner at EQT Ventures,  shares his take on how tech startups and scaleups can win government contracts.

With reports being commissioned on robotics, AI and other cutting-edge technologies, and robots as colleagues set to become a reality, it’s easy to overlook the fact that many public sector organisations are still tied to legacy technologies. Local governments, healthcare and education organisations nationwide are still dealing with jurassic networks and out-of-date software and hardware. Partnering with agile, innovative startups can help replace outdated technology and drive economy, efficiency, and effectiveness – the three key criteria the National Audit Office uses to assess value for money.

Every year, the government invests heavily into thousands of private sector contracts, which range from global corporates to sole traders. Recently, the Crown Commercial Service (CCS) revealed that, since 2012,  central government and additional public sector organisations have spent more than £3.2bn on technology services. Most promisingly, the latest quarter’s Digital Marketplace sales data highlights that 48% of this is being spent on SMEs, which means that £1.43 out of every £3 is awarded to SMEs. Increasingly, relationships between startups and the public sector are vital for investment, partnership opportunities, and business development

Certainly for startups, securing government contracts can be the Holy Grail. Large-scale deployments provide the comfort factor for other prospects and a great validation of the quality of your product. Often, payment terms are also within 15-30 days – the value of which can’t be underestimated for a startups. On the other side of the coin, you also have to be prepared to deal with long lead times, slow procurement cycles, and accept that projects may not always be cutting-edge — so, working with government is appropriate for some startups but not all.

During my time as a startup co-founder – prior to moving into the investment space – I worked with central government departments including the Cabinet Office, the Ministry of Justice, and the Department of Energy and Climate Change. Getting these large customers is undeniably hard work and requires a very different approach to SME and B2C deals. As such, here are some of my tips on how to secure government contracts:

  • Networking, networking, networking – It’s paramount to build up a network of contacts and  gain an in-depth understanding of the pain points experienced by the public sector. Establish what causes public sector workers to stay awake at night — or at least troubles them on a daily basis. You have to ask yourself: can you help them solve that problem?
  • Keep up with the trends – Invest time in researching the key topics, most recent actions, policy documents, and trends that are impacting public sector. For example, if a recent strategy has been established to promote cloud computing — with the principal aim of driving efficiencies and reducing costs — will your product or service help public sector organisations achieve these goals? How can you make sure you’re relevant and truly responding to demand?
  • Security and compliance lead the way – Customers such as the Cabinet Office and US federal agencies aren’t easily swayed by an ever-expanding feature list. Data security sits at the very top of the agenda for such large enterprises, whether public or private. Make sure you’ve earned the necessary certifications to carry out your work and can prove your GDPR-compliant.
  • Get reference case-studies – Once you’ve landed your first public sector customer, it’s definitely worth asking them if they’d be happy to be a case study and provide you with a reference. This will provide prospects with the valuable comfort factor of third-party endorsement, proving that your product or service genuinely works in practice and yields tangible benefits. Once you have your foot in the door, your reputation will spread.
  • Tailor your service – When it comes to government, it simply isn’t a case of one size fits all. Your product or service must be tailored to meet a government organisation’s specific requirements. For example, when it comes to IT, does your product or service meet the appropriate security measures and standards? Can you provide the level of support that the users require? This all feeds into fostering a culture of trust, which underpins any private-public sector partnership, as well as startups-corporates.
  • Provide a product or service that people like using – Ultimately, regardless of all the research you do and the network that you build, if people don’t like using your product or service, it won’t be successful. Go back to your roots and make sure you’re delivering the very best experience for your users. Give people something intuitive and enjoyable to use.

Ultimately, there’s never been a greater need for the public sector to capitalise on the agile nature and innovative thinking of the nation’s startups. As the public sector faces acute pressures, in terms of both funding and public expectations to adapt and tackle challenges such as an ageing population and air pollution, it makes sense to enlist the help of the private sector – specifically, startups and the flexibility they bring, as well as an entrepreneurial mindset.

Outsourcing technology support enables problems to be solved more quickly. Not only do they attract technology leaders and innovators from interdisciplinary fields, but – quite simply – they produce better solutions. By casting a wider net to encourage innovators from organisations large and small, spread across the public and private sectors from a range of fields, we can improve the diversity of ideas available and ensure that Britain is truly a nation of innovation. This future-proofs our public sector organisations while giving public sector staff the time and resources to carry out their crucial work as efficiently as possible –helping business leaders, public sector staff, and everyday citizens alike.