2022 GovTech 100

All right, happy Tuesday everybody. Welcome to a special episode of In Case You Missed It. Today we're going to be talking about the GovTech 100 for 2022, and as we were reflecting on everything that this list has been— this is year 7 of GovTech's curation of the top 100 companies in the market, so what an incredible journey it's been. We've got a lot of data to share, a lot of stories, a lot of insights on what's been happening in this industry. We've got a lot of ground to cover. We're going to start first with just looking at what's happening right now in this moment in time. We'll bring in some special guests to talk about what's going on in the trenches of the market. We'll do our year-end review as we talk about and break down the top editorial stories and the data that you need to know about the GovTech market. And then our big reveal is here. We'll talk about our 2022 GovTech 100 and then our predictions for 2022 and the years ahead. Engage with us, uh, we're here monitoring. We are live, so feel free to shout us out on LinkedIn, YouTube, Twitter, whatever platform that you are watching. and make sure you check out the feature at GovTech.com as well as the full list will be available at GovTech.com/100. Now, when we look at all of this momentum and all of this energy that's in the market, we like to equate it to what we call the App Store moment. GovTech is having an App Store moment. And if you remember the iPhone, when it was first launched, it didn't actually have an App Store. You were stuck with what you got. You didn't have flashlight apps or any of the other things that were there. There was no App Store. You were confined into the walls of Apple's garden. Now, when the App Store was released about a year later, all of a sudden there was this moment, the App Store moment, where entrepreneurs and investors and others came. There was a perfect storm of innovation that came together to really light up new capabilities leveraging that device. And we like to say that right now we're kind of in that moment. We've got changing citizen expectations and stakeholder expectations in government. We have new government leaders that are thinking differently about how technology can solve problems. Cloud has driven all kinds of new changes where it's now accessible to anyone. You don't have to be a big agency, you can be a small city. You've got increased available funding from government and once-in-a-generational federal funding available to modernize old legacy systems. We've got loosening procurement rules and regulations driven by the pandemic as we found ways to use technology differently. We've got a lot of existing company and market maturity that's been happening. We'll talk about that today. And then of course, our hungry entrepreneurs that are looking to tackle complex challenges. We've moved beyond, you know, just tackling the front-end challenges of government now into looking at some of the problems that exist under the hood of government, and some very complex challenges are being tackled by entrepreneurs across the world. And then of course, available capital. Investors have met these entrepreneurs and these companies and are funding them at various stages of growth as they go forward. This is an App Store moment. And the market is hotter than ever. We expect to see a lot more energy and excitement here as we go forward. Now, what we wanna do is bring in a special guest to talk about what is happening in the trenches. And as Joe and Jed and I were kind of contemplating, who should we bring in to talk about what's going on in GovTech? There was no one better than our own CEO and President, Kathlea Robinette. I'd like to invite Kathlea to the table. Kathlea, thanks so much for carving some time out to join us for our big launch today.

All right, thank you everyone and Happy New Year to everyone. You know, I'm super excited because I've always loved the number 22. It's one of my favorite numbers, so it's going to be a great year, I can tell you that.

Absolutely.

So first question for you is just around what you're seeing. What are you seeing in this crazy market right now?

Well, you know, Dustin, I think you covered it a lot in your opening remarks, but You know, I've been doing this for a really long time, and, and I'm excited to say that GovTech is mainstream. Here we are, right? I look at traditional media, what people are talking about, and, you know, we've made it. You know, cities, counties, and states have made it into the market. So I think that is what's going on. I think I saw some things last year just in terms of innovation, time to market, that I've never seen before. So we're going to see an acceleration of that in 2022 for sure. And, you know, I just, I think this market is in a moment of change, and I'm very excited about that. And this term that we call the industrial complex of government procurement, it's about time that it really changes. So we're seeing some of that, and I think that's going to be tackled. There's got to be a better way of going to market, a better way of tackling this procurement mission that government has. So I think you're going to see more viable areas here. So those are some of the things that I see.

Well, Kathleen, thanks for joining us. The last couple of years have been jam-packed with federal funding, whether it's been the CARES Act all the way now to the infrastructure bill. What role do you think the federal funding will have on government technology spending this year?

Yeah, thank you, Joe. You know, it's a really good question. We are seeing a huge amount of funding that we've never seen before, right? I mean, you know, you and I have been covering this and following those funds for years. You know what I think is interesting about this time is the federal funding is going to, I think, also exacerbate state and local funding as well, because this is a moment in time that people can take advantage of. I think it's a time for rethinking government and reimagining some of it. There's just some market dynamics going on, not only the funding, but we have leaders in place now who I think get it a lot more than leaders in the past. I think the funding is going to be huge along with additional funds to be really in a moment so that these cities and counties and states can take advantage of all this and some of the things that they've been thinking about and dreaming about, I think it's our time to take advantage. You're going to see that funding play out.

Kathleen, it's such a pleasure to talk to you here in a new year. What part of GovTech as a market are you most bullish on right now?

Yeah, that's an interesting question. You know, I think a lot of splash and emphasis has really been on kind of that front end of government. Where the digital experience, the citizen experience, all those things, we've made a lot of progress here, but I'm more bullish about, I think, the hard stuff. You know, it's like the hard thing about hard things right now. So I think it's time to really look at the backend, those systems, you know, think about these crazy systems that exist in cities, counties, and states out there. And, you know, we're seeing some change here. And I think it's a moment in time where we can look at these— the heavy lifting, right? The— all the documents, the records, those huge systems. It's really an opportunity with the funding, the market dynamics, the technology available to really change that. And I'm super bullish about this. I think It's a digital transformation moment that we've all been talking about for years, and I think we finally have that moment. It's going to happen.

Now, I know investment is a big part of kind of funding that moment, and it's interesting to think of how much this market has changed in the last 7 years since we've been curating this list. I mean, go back 7 years, there were a handful of investors that were experimenting in GovTech more as a corporate social responsibility play. Fast forward to today, now we've got dedicated funds for GovTech. You know, it's a big part of portfolios. People have seen that it's recession-proof. So tell me a little bit about what would you tell investors that are listening in right now that are on the fence with GovTech as a market? Any, any words of advice for them?

Well, you know, I can say that this market is hot. You know, it's hotter than it's ever been, and I am so excited about what I'm seeing across the board. I think a few things though, you know, a lot of, you know, companies have gone into this space, you know, they look at one thing, they see, oh, this isn't working and we're going to go solve that one thing. So I think it really goes beyond this corporate social responsibility model. And, you know, it's really this, this time to engage government and really bring solutions to this market that's in desperate need. The market dynamics have just changed. It's not how it used to be. I mean, look at these 7 years and what we've seen. So it's hot. Investment is there. The time is now. Money, money, money.

You've made a career of helping people crack the code of state and local government. But when you look at entrepreneurs, what would you advise them to do to best connect to serve state and local government as a customer?

Yeah, that's— it's great, Joe. Thank you for that. You know, I think it just goes back to what I was saying prior. You know, someone comes in, they see a problem, and they, they fix it kind of with one little app. I think it's really a time for folks to look at being super market critical. How can you really help? You know, government right now, they're reaching, they're looking for solutions like never before. And I think just kind of the way the government was done is not how it's going to be, you know. So I think really understanding agencies' needs, talking more to the people in the market, really coming up with solutions that are going to go across the board and really help government— I think that's really going to be the thing. I think you have to look at total cost of ownership. You need to look at this balance that government always plays with You know, being entrepreneurial, but also the risk of all that. So I think it's a time to step back, study, and be market critical at this point.

Daphne, something that keeps coming to my mind is about the incumbents in the GovTech space. From your perspective, what should they be doing right now to take advantage of this moment and not get left behind?

Yeah, you know, something that we've worked on with companies for years. I think right now incumbents need to lean into this market. I'm really seeing a difference in the government leaders that I've talked to. They need solutions. And, you know, again, I've seen some things happen over the last year that I didn't think I would see for a long time. So it's time to lean in. It's, it's It's time to really help them. You know, take your partners, bring them your best, bring in your experts from your companies and lean into this moment in time. So incumbents are definitely here to stay. You know, stay fresh, stay helpful, lean in.

Absolutely.

And you've got some fans that agree with you online. Our partners at CivStart couldn't agree more. You know, also thinking about the hard stuff, including infrastructure and water infrastructure with all the federal funding that's there. So lots of great comments there. Keep them coming on LinkedIn and YouTube. My last question for you, Kathalea, is around what you are most excited about for 2022. Tell me what's on your radar for the year ahead.

Yeah, you know, Dustin, we had a great event in Phoenix in November, and it was interesting to have a chance to speak to government folks from around the country. And, you know, this is a moment in time. I'm telling everyone, we've never had this moment. This is a once-in-a-generation funding opportunity that's going on out there. And, you know, we've got some workforce dynamics, right? Government, they're having a hard time finding folks. And the technology is there. So for me, these market dynamics are finally here for this moment in time that I've been waiting for my whole career. So I'm very excited about 2022, really excited about the potential for technology and government and true digital transformation, which I feel like I've spent my whole life talking about. I'm very, very excited right now, Dustin.

Awesome. Well, you've got an amen from Mike Wands as well from Civic. So thank you so much for carving out some time, Kathleen, to join us for our big launch today. We'll let you go and we'll bring in now Ben Miller as we talk about GovTech Biz's year in review and break down the top stories that you need to know about. So Ben and his team have been on the beat of what's been happening in the market. If you don't subscribe to the GovTech Biz newsletter, highly encourage that you do that, govtech.com/biz, B-I-Z. Make sure you check it out. But Ben broke down the top 10 stories for the year, and we're gonna take a moment and kind of go through them and get Ben's take on why these, uh, were in his list for the year that was. So Ben, thanks so much for, uh, joining us.

Great to be here, great to be here. It was a very interesting year.

That it was, and, uh, I think we've got a better year ahead now in 2022. Let's start first with your number 10. Mark43 raised $101 million in their Series Z. Tell us why and what this was for the market.

Okay, so there were several really large fundraisers this year. This one jumped out to me in particular because of the size. It's not that often that we see an investment round in GovTech break the 9-figure barrier, but this one did. Mark 43 has been an interesting company to watch for a while. They are because of the market they're in, frankly, which is that they are in CAD and RMS for public safety, a very established market, very backend technology, very integrated technology and fundamental to public safety. So it's kind of slow growth, but they actually managed to double their client count in a couple of years, and now they Nearly doubled their investment total as well. So definitely interesting to see after years of work from them, it's really starting to— it seems like it's taken off.

All right, number 9, Veristerm goes on a public safety shopping spree. Right.

Okay, so Veristerm, apologies to them. I did not know who they were before 2021. But they actually went on a crazy shopping spree. They acquired 6 companies in the span of a year. This came with some private equity backing from Banneker Partners. They did a couple of companies that we were quite familiar with, including Spider Technologies. And they're in the public safety space, but their technology kind of runs the gamut. They're one of those companies that's just kind of rocketing forward with private equity investment. And frankly, that's something that I think We're gonna see happening a little bit more in the future.

All right, coming in at number 8, Periscope Holdings was acquired for $207 million.

Right, okay, Periscope Holdings, a company that we were quite familiar with. They're in procurement technology. I was a little bit surprised to see them acquired by a company that was more in the commercial space. MDF Commerce is, is all about e-commerce online. And they acquired Periscope Holdings for a pretty big price tag, $207 million. Again, a pretty large figure for the GovTech space, something that's becoming more common.

Number 7, MuniCode acquired after 70 years.

Okay, so Civic Plus has been a pretty active acquirer. They took on new private equity partners recently, and I just was really interested in this one personally because I'm so familiar with MuniCode. This goes back to my college days. journalism looking up city ordinances on the local website. And I mean, if you look up city ordinances, I tested this when I wrote this story. If you go to a random city's website and try to look up their ordinances, it's either a PDF or Municode pretty much invariably. I'm sure there's others out there, but if you look around, yeah, Municode has been doing it possibly longer than anyone else that we had on our list. They are extremely well established, they're extremely well known, and they finally joined another company in Civic+, which has been very active in acquiring companies in the GovTech space lately. And it fit pretty germane into their technology portfolio because Civic+ is so well established in government websites and communications.

A growing GovTech platform. All right, coming in at number 6, Vera acquisition creates red light camera giant.

Right. So Vera acquired Redflex, an international company, and that was also something of a theme this last year was mergers and acquisitions creating more international expansion with the companies on the GovTech 100 list. But specifically, so these 2 companies were both in traffic enforcement, intelligent traffic solutions. The thing they had in common was red light cameras. And coming together, they created an extremely large red light camera provider in the US, which is important not only because red light cameras are fairly common these days, but because in the public safety space, these kinds of things, automated enforcement, is an issue that the whole public safety space is beginning to grapple with more and will have to grapple with more going forward. So I think this is a very Interesting deal. They're going to be a very interesting company to watch.

Number 5, 3 startups merged to form Optimere.

Right. Okay. So Archive Social, one of eRepublic Ventures' former portfolio companies. This was a really interesting 3-way merger between startups and something I'm kind of excited to see if happens more is rather than necessarily seeing larger established companies acquiring startups, and getting younger in that way, startups themselves merging together and becoming larger companies just together sort of natively. It's also something we saw, we've been seeing happen with Zen City acquiring a couple of other startups recently. But this one is really interesting because they kind of carved out a unique little space for them. They all have to do with online communications compliance for local government. Archive Social does archiving of social media posts. Moncita does website compliance, including like accessibility. Next Request does FOIA. And these are all things that local government have to worry about, but which can be pretty cumbersome to deal with and, you know, maybe kind of get thought of as a thing that you have to do rather than a thing that you want to be doing actively. And I think that's where that company wants to take it, is making these things so easy for local government that it's something they want to engage in rather than have to engage in.

All right, Granicus buying 2 civic engagement startups at one time.

Okay, so I mentioned mergers and acquisitions bringing people internationally. This gave Granicus a foothold in Oceania. These were 2 Australian companies, Open Cities and Bang the Table, and they were an interesting direction for Granicus to go because They create a lot more direct citizen engagement avenues for Granicus. Granicus obviously has been really big in the communication space, government meetings, government emails and newsletters, websites with an acquisition they had a while ago. And now they're kind of crossing over onto the other side and trying to engage citizens more directly. I think this is a space that's going to be very, very interesting to watch. Kathleen mentioned earlier, and Granicus is headed in that direction.

All right, number 3, a huge year for GovTech M&A.

Right, so this one's sort of a catch-all. I wanted to include this story because I really appreciated how our writer Thad Ritter approached it and really wrapped things up. And, you know, we've been talking about M&A throughout this whole list, but this, you know, I just wanted to kind of acknowledge the stories on this list are just part of the picture. We saw so many mergers and acquisitions in GovTech this year that it actually gave us a lot more room on the GovTech 100 list for this next year to bring in some companies that we've kind of wanted to include for a while, but, you know, we ran out of space, honestly. And yeah, it was a huge year for GovTech M&A. We've talked a little bit before about why that might be. And it's just very exciting to see not only these companies that have been working for years achieving an exit, but also the younger companies pulling together and creating new partnerships and alliances.

All right.

Can technology help weed out disinformation online?

Okay.

So this one was a personal pick of mine, which is simply because I find this area extremely fascinating. There are a couple companies that are starting to sell software to government to— and they all do it in different ways. They all have their own philosophies, but essentially they're trying to bring automation to some or all of the process of government agencies looking for misinformation and disinformation online, which has suddenly become an extremely important part of the work for certain government agencies, especially elections officials, public health agencies are 2 of the big ones. The misinformation that circulates is starting to become a big problem for them and something that they feel an obligation to address or maybe even have a legal obligation to address in some cases. And, you know, the question obviously right off the bat is to what extent can you automate or even outsource the decision-making process about what is and isn't misinformation or disinformation? It's a fascinating area. It's going to become more important as we move along. These companies have different approaches, and I'm very curious to see how that plays out.

All right.

Number 1, Tyler acquires NIC for $2.3 billion.

Yes. Probably the biggest deal in GovTech history. These were essentially— I mean, correct me if I'm wrong. I think they were the 2 largest companies on the GovTech 100. Tyler Technologies, huge in local government, NIC, huge in state government, both 2 of the more well-established and older companies on the GovTech 100 list. And it finally happened. They said they'd been talking about this for, I think, 15 years on some level, and they came together. It was a multibillion-dollar deal, and it creates a company— I mean, Tyler has— they've always had a lot of acquisitions. But this one is truly transformative for them. In the last couple of years, we've seen them go from very local government focused to now they're local, state, and federal. They're starting to get into low and no-code platforms. They're expanding into all of these different verticals. And I mean, this is the kind of deal that sends signals to people as well. You know, we talk about investors and whether or not they are willing to take the dive in GovTech. This is a very interesting deal for those people to be looking at.

Absolutely.

Well, thanks for that breakdown. We're going to keep you on because we're going to get your commentary and perspectives as we talk about what the future holds. But now let's break down some of our year-end review from a data standpoint, and let's talk a little bit about just the funding activity that's happened in the space. So looking at US GovTech companies and Crunchbase data, there's been over 40 funding rounds in 2021. Directly allocated towards GovTech companies. I mean, that's incredible to think about even in this period of uncertainty and kind of fiscal constraints. Now we're seeing a lot of funding activity that actually has been a record-setting year for the GovTech market. Now the amount of capital raised has also now crossed that billion-dollar mark. So when you look at GovTech as an industry, over a billion dollars in capital was raised in 2021. So in 12 calendar months, over $1 billion in capital raised by companies that are focusing on government as a customer. So we've come such a long way in such a short period of time. As Ben has talked about, so much M&A activity that's happened in the market, you know, from the NIC deal to ZenCity acquiring Elucid to RockSolid acquiring PrimeGov, uh, you know, to the GovQA deal with Granicus. I mean, just so much activity has been happening in this market, and we expect 2022 to be another year of incredible M&A activity. 13 of our GovTech 100 from 2021 were acquired in 2021, so we've got a pretty good hit rate with our, our list of, uh, of acquisitions. So great to see that. And now let's talk a little bit about some of the data for the 2022 GovTech 100 and what you need to know. Now, first of all, there's an amazing feature that was written by Thad on what's happening in the market, some of this Also pull some insights from the trenches of a conference, the GovTech Summit that happened in Austin, Texas with in-state partners and Advantage Capital and AWS. Highly encourage that you check out the feature at govtech.com to get the full perspective of what's happening. Now, the average age of our 2022 cohort of GovTech 100 companies, 8 years. Our total funding rounds in the 2022 GovTech 100 companies sits at 277 funding rounds. The total amount of unique investors in the space, and I think this is really interesting to look at. It's not just one or two big conglomerates that are investing in the market. You've got 516 unique investors that have put capital into helping grow and scale just those 100 companies, which are a curation of a much larger industry that's also raising a significant volume of funding. Over $4 billion in total capital raised by the 2022 cohort of GovTech 100 companies. Incredible amount of funding for scale. And over 197 acquisitions made by that cohort of 100 companies. So those 100 companies collectively have acquired over 197 other companies in the market, kind of feeding into the M&A and market maturity that we've been seeing. Now, 8 of the GovTech 100 for 2022 are publicly traded and have a market capitalization of over $88 billion, and you can see a representation of that on the screen. So, you know, these firms that are going to the IPO stage are large and they're doing well. In fact, one of the thought exercises that I had is if I were to go back to, you know, let's say 1990 and invest in Tyler, for example, one of the larger ones on the list, if I invested on May 25th, 1990, $100, what would that look like today? Well, this is a great indication of how these IPOs have been performing to the market. That investment would increase 12,599% at an annual rate of return of 24%. Giving me an investment amount of $12,699. So from $100 to that. So this market is performing even at the IPO state. It's great to see these, uh, stock performances there. Now, 14% of the GovTech 100 in 2022 are female-founded, and this is another amazing stat as we start to see female-founded and female-led companies that are tackling some of the most complex challenges in the market. So exciting to see companies like CityGrows and others that are on the list doing incredible work and GovTech. And one was actually acquired today. So out of our 100, we've got one that was announced today as an acquisition. So congrats to eRepublic Venture portfolio company YLine, who was acquired by Clear. Uh, that was announced today, and there's a great interview on CNBC with Clear CEO. So congrats to the YLine team for, uh, for that news. Now let's break down our GovTech 100 for 2022 and talk about who is on the list. Let's start first with who's new for 2022. So we've got a ton of new entrants into this list that are doing just incredible work in the market. And actually, I want to kind of open it up to Ben and Joe and Jed. You know, any of these companies really stand out to you as doing some incredible work in the market? They're all doing great things, but I know these have crossed your radars over the course of the last year. Any thoughts on any of these?

I could talk about Camino. So yeah, Camino, one that we've been watching for a while. They had a really interesting year. They're in the permitting and licensing space. That's a pretty competitive space. Got some bigger established companies, has some smaller startups involved as well. Camino is notable for a couple reasons. One thing I really liked that they did this last year was they created a remote inspections tool. focused a lot on just streamlining the entire process, automation, and trying to get, you know, inspection reports and those kinds of things out to people as soon as possible. The kind of thing that makes a tangible difference within the process and makes things easier for both government and the people who rely on them.

Yeah, another for me would be G-Com. It's on the list that you see right there. You've got a growing platform focus that served well over the pandemic in health and human services. They've got a strong, very strong offering in vital records as well, but they're also playing in the licensing space. They've got some infrastructure plays as well, and infrastructure modernization and fraud, waste, and abuse. So in many of the areas that we see trending right now in, uh, in late 2021 and as we head into 2022.

Absolutely. And, you know, we talked about Optimir and kind of the combination of those 3 different, you know, Muncito Archive, Social, and Next Request. It's exciting to see those movements, you know, the public safety play with First Arriving, you know, just so much emphasis on some, you know, incredible market activity. Jed, any of these catch your eye?

MySidewalk, I think, is quite interesting. That's a company that helps local areas with datasets and things. And when you look at the name, it really doesn't tell you everything that they're doing. You know, you look at MySidewalk, you might think that it's just about, you know, data on, you know, fixing sidewalks or something. There's a lot of different things— crime, permitting, citizen satisfaction, and so on and so forth. So I think that's a really interesting addition to the list.

Absolutely. So congrats to all of our new inductees to the GovTech 100. Congrats to IT Simple as well as a part of that. But also, you know, this list is a curation of 100 companies that are pushing the envelope, moving the needle in GovTech. So, you know, for all of ours that are returning to the GovTech 100 list again for 2022, you know, hats off to you for the work that you're doing in the space and the problems and the complexities that you're helping government navigate. In response to this. It's been incredible to see each of your journeys over, you know, the past 7 years, um, and, and to see, you know, how these companies have evolved and, and how they've grown significantly in the market. And, you know, it's just, it's been an incredible ride. So congratulations to everyone that is recognized on our GovTech 100 list. You can see at the bottom of the screen as well, highly encourage that you check out the full list of GovTech 100 companies at govtech.com. You'll also be able to check out Thad's feature, as I mentioned, as the COVID story in this month's Government Technology magazine. It's also available at govtech.com as well. But just so much energy here and excitement in the market, and we're so excited to be able to celebrate with each of you today as a part of this rollout. All right, so now we're going to start to transition into As we think about kind of what's ahead for 2022, you know, we've got an incredible number of companies, investors. I mean, this market is having, as we've talked about, an App Store moment of sorts. I wanna get each of your perspectives on what the future holds. What's your prediction for the GovTech market in 2022? Joe, let's start with you on this.

Sure. I mean, I think we're gonna see some stability. You look at what we saw at NASPO in their latest report, Median state budget increase is around a little over 6%. We're still seeing steady gains in tax revenues. So, you know, you're seeing states build up their reserves. So I'm thinking the economy is gonna be fairly stable in 2022. That's gonna translate to another year of IT growth in terms of government technology-related spending. You know, it's gonna be propped up by the various federal spending bills that we talked about earlier, whether that's— the last little bit of CARES to ARPA to the beginning of the funding under the infrastructure bill, and I think that's gonna, you know, translate into a very strong and positive year in GovTech and provide a solid foundation as we close out 2022 and look at 2023.

I know, hard to imagine. We're in the 2020s now. So Jed, what are your thoughts on the future for GovTech this year?

You know, mine is more about a question, and maybe Ben can jump in here after I kind of set it up. You know, I'm going back to like the number one story that Ben cited earlier, uh, Tyler acquiring NIC. And I think in a previous episode, um, I pointed out that I'm not a business expert at all, but when I, you know, saw this deal, it kind of made me wonder, is there something just as big, if not bigger, coming around the corner Uh, maybe in 2022. I just kind of wanted to open that up, uh, for maybe your thoughts, Ben.

Yeah, that was, uh, that was one I had like 5 predictions written down. Uh, it was, was gonna kind of, uh, wait to see what you guys said and then, and then choose if, you know, one of you already said. Uh, one of the things that I was thinking— that, that was one of the things that I was thinking was that, well, I feel like there's another Another big deal bubbling out there that that might happen this year. It's it's hard to achieve the scale of the Tyler NIC deal in GovTech, but certainly we could see something very large. You know, if you if you look at the market, there are there there's more private equity backing now than there has ever been. There are a couple companies that have been growing. for years that could potentially look at doing an IPO. Uh, we could see another SPAC-type deal or reverse IPO. Um, there are a lot of avenues that it could go, and there are some companies I think that are growing fast and could leverage their position to achieve a pretty big buyout as well.

Yeah, well, I want to, I want to stick with you, Ben, for this and have you break down your other predictions for the year ahead as well. You mentioned you had 5. Okay, give us the other ones.

All right, cool. Um, all right, so one of them, and this, this one's kind of generic, uh, I feel like we're, we're in a state right now where we're gonna see continuing and, and maybe, you know, significant growth of acceptance in SaaS and commercial off-the-shelf solutions among local government. Um, you know, a lot of them were kind of forced into this by the pandemic. They've been using these solutions for a while now. I think Maybe some minds got changed. We're seeing more funding come from the federal government, including funding with very few strings attached, saying, you know, basically use this to do what you need to do to operate better, to deal with the pressures of the pandemic, to help people work remote and serve citizens digitally so they don't have to come into your offices. I think all of these things are coming together, and I think it's— my gut feeling is that it's becoming easier for government, especially at the local level, to take on some of these solutions that they might have been a little bit skeptical about before. Another one, I already talked about the really big deal adjacent to that. I feel like it's very possible and likely that we see another company or 2 get some private equity backing and sort of rocket forward, similar to the VersaTerm, what's happened with them, because I feel like private equity companies are taking notice, and there are a few candidates on the GovTech 100 list that, that seem to me like companies that would be kind of primed for that, to take some, some deep-pocketed investors who are interested in creating an accretion disk around that company and expanding them into different verticals, into different markets, and creating some value, to put it in investor terms. I think we continue to see some consolidation, to put it vaguely, in the public sector space or public safety space in particular. We've been seeing this for a while, and I just think there's a lot of, there's a lot of kind of niche companies out there and a lot of potential acquirers in the space that are looking to compete with each other and to grow and to take advantage of new technology that's making waves in in public safety. And last is kind of a prediction, but just, I wanted to put out my personal feeling out there that there are 2 niches in GovTech in particular that I'm particularly excited about in the coming year. One is local government communications and engagement, that continuum. I feel like there's really exciting things happening there. Cathlea talked about it earlier, I talked about it earlier, and I feel like it's It's very important for local government right now to start getting more deliberate and more data-driven about how they engage with their constituents. The other one is water technology. We saw some funding come through in federal legislation. We're seeing more regulations happening that are creating more work for local utilities. And it's— an extremely important space that's starting to gain access to the kind of technology that can really transform how they do things and potentially make a big difference in this infrastructure that is both fundamental and old in much of the U.S.

Yeah, I think it's a good point because a lot of, you know, the federal funding that was directed at modernizing these systems, most people don't realize it's also the underlying systems that support them too. So technology plays into that as well. So I'll give you my 3. I think one, you're going to see more dedicated GovTech funds. Now, you know, Ron has his amazing GovTech fund that's out there, but I think you're going to start to see some of these institutional investors building dedicated GovTech practices that are really focused on this market and focused on accelerating traction in this market. I think you're going to see, you know, Joe and I have talked at length about something we call shadow apps, which is basically the evolution of shadow IT. Where a department goes rogue and they deploy their own systems kind of under the, you know, under the shadow of the CIO. You're gonna start to see that evolve into applications as we saw with the pandemic, but that's here to stay. I mean, people want best-of-breed technology to solve their challenges. And so they don't want vendor lock-in. They don't want the industrial complex of the past that Kathleen talked about. They wanna find something that's best-of-breed. And I think, you know, the pandemic really accelerated a lot of that. So I think we're gonna start to see new procurement Procurement behaviors as it relates to that. And this is going to also open the door to rethinking security in the context of like, what is the enterprise? And if my employees are using applications at home to do their jobs and to do them more effectively, how do I maintain records compliance? How do I maintain HIPAA compliance? How do I do all of that at scale? So you're going to start to see technology that addresses the need to have an enterprise approach to this new kind of paradigm shift that's happening with how we procure technology. And then I think the area I'm bullish on, I think records is gonna be huge. You know, anything that is kind of at that system of record level, we've seen have, you know, really notable exits and a lot of M&A activity around it because it's sticky, right? I mean, once you're in government and you have kind of that layer that's there, it's a little bit harder. It's like direct deposit, you can't undo it. But I also think workforce tech is kind of an area that I hope we'll start to see more innovation on. I mean, everything has been thrown up in the air as it relates to how you manage and how you train and how you deal with workforce challenges of today. We've got hybrid work as a norm in government, but I hope to see more technologies that are focused on enabling and augmenting employees, maybe tapping into, you know, some gig workforce models as it relates to, you know, the gaps that exist when it comes to the skills in state and local government itself. So hopefully we'll see some innovations there as well. All I know is it's going to be, you know, if 2021 is any indication, as we kind of look at the rocket ship GovTech was, This is going to be another wild year of excitement.

That's great. Thanks for that, Dustin. And I want to thank Ben and Kathlea for joining us on this special episode. We greatly appreciate all of you tuning in and sharing your comments with us as we, as we navigate this longer than usual episode. But we also wanted to extend our congratulations to all of you that made the GovTech 100 this year. Again, if you want to check out the full list, you can check it out at govtech.com/100. Thanks for joining and take care.