Conversations with founders: How to build a GovTech startup

Ever wondered how startup founders decided to build their company? Or what experience they had in that industry that made it possible? As part of our research for PUBLIC’s upcoming report on the background of GovTech founders we interviewed 8 startup founders to explore some of the challenges and successes encountered when building a GovTech startup. To ensure a diverse cohort of experience and expertise we interviewed founders of startups across multiple sectors including HealthTech, PoliceTech, EdTech and CivTech.

While founders had differing experiences working within the public sector, most had attended business school and had previous experience as a founder of a startup in a similar sector. Those that had worked in the public sector before founding their startup had learnt from the challenges that they came across and used their experiences to build a solution. Here are the first four startup founders that we spoke to!

Slava Kremerman, Co-Founder and CEO of Zen Educate

Slava Kremerman founded EdTech startup Zen Educate in 2017 after meeting his co-founder in business school. Zen Educate helps schools cover staff absences - a problem which was first identified by a family member. Having worked in banking and consulting, Slava had no relevant public sector experience although he had previously helped to build FinTech startups.

How to break into the EdTech market?

Schools have autonomy that most public authorities don’t have and so are able to procure many products and services on the spot. Roughly 30% of their clients come through referrals from other schools that use their products. Having raised three rounds, Zen Educate currently has about 50 employees and Slava argues that prioritising values and passion over skills when hiring is something that he found to be important during his journey as a founder.

Formula for success?

Attention to execution - constantly improving and delivering a high quality service.

One of the greatest challenges Zen Educate faced was the limited access to funding for GovTech companies, combined with lack of procurement opportunities.

Iraklis Bourantas, Co-Founder and COO of Novoville

Iraklis Bourantas worked for a software company, a tech institute and the Greek Ministry of Foreign Affairs before co-founding CivTech startup Novoville. His family was deeply embedded in local government and his father and aunt were both Deputy Mayors. Being a politically active citizen, the idea for Novoville came out of his own frustration in engaging with the local government, and through his own connections he pitched it to newly elected, younger mayors, who loved it. Iraklis found that the best knowledge and experience came through working with the first couple of client’s and they adapted the product to these challenges. Through scaling into different countries they learnt that 80-90% of the challenges local authorities face in different countries are roughly the same.

Iraklis and his co-founder Fotis Talantzis personally funded the development of the prototype and raised funds after their first few clients in order to grow. They approached a local VC that was partially funded by the European Investment Fund; it took about 6 months to convince them to invest because they were weary of the GovTech sector and had a mistrust towards the public sector. For the second round they wanted an international range of VCs, and once again struggled to convince VCs about the viability of the sector.

Despite having won 56 contracts across 3 countries, Novoville’s biggest challenge was continuing to grow in new markets, and managing remote teams across countries. Iraklis told us that understanding the local realities of new countries often feels like starting a new startup from scratch and every time you have to convince new local stakeholders of the business’ viability and the sector’s potential.

If you could go back - what would you do differently?

Iraklis said he would change their approach to hiring and prioritise hiring people who would fit in with the culture and mentality of the company. When it comes to investors, they regret wasting time on VC’s that were not serious which caused delays in the company’s plans.

Advice to new startups?

‍ Start small with one client, adapt your product based on the feedback from this client, and only then try to scale.

Daniel Mohamed, Founder and Managing Director of Urban Intelligence

Daniel Mohamed studied urban planning and regeneration before founding Urban Intelligence. He previously worked as an urban planner for 3 years during which he observed many opportunities to change things. He claims he wouldn’t have known the the problem which his startup solves existed if he hadn’t worked as a planner.

Daniel didn’t have any networks in technology, venture or finance and admits that being self employed was difficult. To finance the business initially he took out two loans, one from a bank which he personally guaranteed, the other he received from UCL as a result of winning an entrepreneurship award. It took him a long time to find the right investors. When the company made it onto an accelerator, they weren’t VC ready by the time they graduated from the accelerator, and so had to go hunting for angels. Daniel argues that accelerators are good at putting you in touch with VCs but not with angels. He met an angel through luck at a networking event, who then introduced him to further angels.

The biggest challenges Daniel faced were having to rely on 3rd party public sector data, recruiting the right people with the right skills and building a good team dynamic, and raising funding. If Daniel could go back and do things again he said he would take a much leaner approach to building a startup as he regrets spending too much time on spec when they could have got an MVP out of the door much faster.

Most important skill gained?

Emotional intelligence - to deal with the shocks and unpredictability of founding a startup.

How could the  public sector change for the better?

Move away from document based systems and turn plans into models that are constantly updated with the latest data so you can track things in real time and make predictions for the future.

Ian Stevenson , Co-Founder and CEO of Cyan Forensics

Before founding Cyan Forensics, Ian worked as an engineer, consultant and CTO. After having spent time in business school, Ian worked with startups to help create businesses, raise money and facilitate university spin-outs. He was called in by Napier University in Edinburgh to assess some research to see if it had potential for commercialisation.

After deciding that the research did have potential he chose to spin it out with Bruce Ramsay, a key member of the research team, and Cyan Forensics was born. Ian found that his network contributed strongly to getting Cyan going and he knew where to look for professional services, legal and financial advice, recruiters, office space and other support. Cyan Forensics has won a major contract with the Home Office as well as several contracts with individual police forces, including some in Europe.

What needs to change? Startups need investors who understand the benefits of public sector markets - this could be achieved through greater dialogue between the two. If the public sector wants innovation it needs to be willing to listen to new ideas, and learn that they will not always be presented with final products.

Public sector bodies need to be willing to try new things, run pilot programs, and to become a good customer, because people won’t innovate if there is no reward. Investors will not back companies that are trying to sell to the public sector if the process is so convoluted that ultimately there is no return. A problematic public sector mindset is that ‘things must succeed when you do them’, which is incompatible with the startup mindset of ‘try something and see if it works’. Success emerges from failure - risks shouldn’t be taken in all areas of government, for good reason, but there need to be dedicated spaces for risk-taking if the public sector wants to support innovation.

Interested in hearing from more startup founders? Stay tuned for Part 2!