For some years now, governments have been turning to startups technologies to improve the public services they provide to their citizens. There are digital solutions to streamline public procurement, others that improve health services and urban mobility thanks to data intelligence, and others that simplify and make tax collection or the management of public finances more efficient.
This ecosystem of companies, known as govtech, is experiencing a moment of emergence in Ibero-America. And they could not disembark at a better time in a region that, despite its heterogeneity, was characterized by slow, non-transparent and often inefficient bureaucracies. Everything seems to indicate that its contribution to public management will be crucial to modernize the States and, above all, to offer quality services adapted to the old needs and new expectations of citizens.
Govtech is the most recent movement in the public innovation sector that seeks to put the public sector in way startup, and that leaves three big winners: governments, companies and citizens. It is a relationship where the Government finds innovative products and services to generate social impact, companies obtain financial returns and new markets, and citizens receive quality, personalized and intelligent public services that affect their daily lives.
In Mexico City, for example, the startup OPI Analytics works with the Digital Agency for Public Innovation in simplifying public procurement through “Tianguis Digital”, where suppliers can find out about government supply opportunities, digitize tenders and have algorithms for detecting possible corruption risks. In Colombia, Dasigno developed the “Mi Colombia Digital” platform to standardize public information from various territorial entities, generating savings of more than 30 million dollars.
In Spain, Citibeats created the Covid Observatory to understand the concerns and needs of people during the pandemic and allow agile and intelligent responses by governments. In fact, a sign of interest in these new ventures with a public vocation is that the Spain Digital 2025 Agenda proposes the creation of an innovation laboratory govtech to incubate and accelerate solutions for public administrations. The Community of Madrid also has its own govtechlab, which seeks to bring the innovation generated by startups, scale-ups and digital MSMEs to the challenges of Madrid’s public administrations.
The tendency govtech it is accelerating for two main reasons. First, the significant increase in public spending on government technology in a world marked by a pandemic that has accelerated the digital transformation of public administrations and the growing expectations of citizens for better digital services. Second, because digital MSMEs are key to economic recovery and the revitalization of the business fabric in the new digital economy, particularly the one driven by data. There is no turning back: our future will be much more digital and the 2020s will be a digital decade. Not surprisingly, impact investors and venture capitalists are increasingly interested in this segment of the industry with high growth potential.
In this global scenario, Latin America is positioned as a leader in the development and deployment of govtech solutions to improve lives. There is increasing literature evidence on the potential of these ventures in the region, such as reports on govtech and the Future of Government or the Govtech Index 2020, and investment initiatives to support startups in practically all countries. In this sense, at CAF we launched a first round of impact investments in startups govtech, with direct investments in Colombia, Spain and Mexico. Additionally, with our support, the Government of Colombia launched its first Govtech Laboratory and the one in Córdoba, Argentina, you are structuring an investment fund govtech. We are in a moment of consolidation of digital agendas to articulate the talent of the startups with a public vocation with the solutions that governments need and the investment needs that are required for the circle to be closed.
For the construction of the post-pandemic world, govtech It is a strategy that strengthens the capacities of governments, especially at the local level, to meet the needs and expectations of citizens, who increasingly use digital channels to interact with public administrations. Today we have the opportunity to rethink the way in which digital technologies are used within governments to improve their own operational efficiency, enhance the financial possibilities of the public sector, and positively impact people’s lives, when they need it most.
Carlos Santiso is Director of Digital Innovation of the State at CAF
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.