New Fund Sees Opportunity For Gov't Tech Startups

A new venture fund sees opportunity for tech startups in the government IT market amid shrinking budgets and migration to the cloud, among other factors.

San Francisco-based Govtech Fund launched with a $23 million pot that's aimed at investing in government technology startups. It's billing itself as the first dedicated venture fund aimed at the segment in hopes of capitalizing on a slice of the government IT spending market that Gartner estimates will reach $445 billion globally this year.

Cloud computing, open data, budget shortfalls and shorter sales cycles are all factors that have created an environment ripe for startups that are making hardware and software useful to government agencies, according to the fund.

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"We're proud to support a new generation of venture-backable technology startups that have emerged in the past few years -- helping governments become more efficient, more responsible and better able to serve society. This is just the beginning of a decades-long wave of innovation in government," Govtech Founder and Managing Partner Ron Bouganim, an angel investor, said in a statement.

Deerfield Beach, Fla.-based SmartProcure was one of four companies the Govtech Fund invested in.

SmartProcure's software helps local, state and federal agencies with procurement, including finding vendors, comparing pricing and swapping experience stories.

The company's specialty is at the local and state levels, according to Founder and President Jeff Rubenstein, but it also counts public hospitals, correctional facilities and state universities as clients.

The new funding from Govtech, of which Rubenstein was unable to provide details, will go toward improving the software features and adding more government agency customers.

"We're excited to be part of the Govtech Family. There's some great companies," Rubenstein told CRN. "We're looking forward to growing and working with all these other organizations."

Other companies included in the fund's initial wave of investments include Omaha, Neb.-based MindMixer, Seamless Docs of New York and San Francisco-based AmigoCloud.