Report: How governments can partner with startups to deliver better services

Partnerships with startups eager to solve public problems are valuable tools for state and local governments looking to innovate their services with their limited resources. But sometimes startups grapple with their own barriers to service delivery, and a new report highlights how governments can address common challenges to foster public-private collaboration. 

Clunky tech infrastructure, complex procurement processes and outdated policies often stymie the modernization progress that governments and private sector organizations strive for, according to a recent report from the Kapor Center for Social Impact. However, a smooth contracting and implementation process is critical for the public and private sector to develop critical services that communities rely on. 

While enhancing services like housing, child care, financial assistance, health care and others, state and local agencies are “trying to do more with less,” said Chike Aguh, head of innovation and strategy at the Kapor Center. 

One way to do that is to “create partnerships between startups and governments to make real change for real people,” he said. But implementing tech-based services that are streamlined and accessible to residents largely hinges on whether state and local governments offer an effective and efficient pathway to do so. 

Indeed, the report includes feedback from entrepreneurs and investors who reported struggling with governments’ slow contracting timelines, complex applications and burdensome compliance and certification requirements. For instance, small companies are more likely to struggle sustaining operations while waiting for a contract to be approved or delay the delivery of services due to differing local, county or state compliance requirements, according to the report. 

These barriers and others "cumulatively … creates a chilling effect,” Aguh said. Startups, particularly gap-closing startups that leverage tech to improve community outcomes, may not even try pursuing a project if they believe there are too many challenges associated with it, he explained. 

In fact, the report highlights three strategies for state and local governments to address the roadblocks they may inadvertently create for startups trying to partner with agencies to improve government services. For example, entrepreneurs and investors reported that they desired expedited contracting processes, improved outreach and communication from government agencies and other efforts to remove barriers to private- and public-sector partnerships. 

According to the report, one improvement agencies can make is to better leverage their business support services. The agencies, like New York City’s Department of Small Business Services, generally assist clients with economic development efforts, including funding or technical assistance, Aguh said. 

But a lack of outreach or promotional efforts from business support agencies limits their ability to collaborate with startups, he said. This presents an opportunity for such departments to revamp their service delivery by, for example, improving communications about what they can do for companies to help them develop and launch solutions. 

For business support agencies, “it might be worth it to go upstream and talk to not just the companies themselves, but also their investors,” Aguh said. 

Another way governments can help improve government-startup partnerships is to reimagine their procurement processes, the report states. 

“Without changing laws or regulations, governments could apply the best lessons on human-centered design to remake these processes to have fewer steps, more clarity, decreased repetition and better coordination among government actors,” the report reads. 

Redesigning procurement processes “are very much in the executive authority of many mayors, county executives and governors,” Aguh added. He also explained that, sometimes, agencies can simply update their documents to reduce jargon and leverage plain language that startup leaders may feel more comfortable engaging with. 

Finally, the report pointed to the need for governments to adjust current compliance and procurement laws. 

While rules and regulations about these types of partnerships “were meant to protect environmentalism, discrimination [and other issues],” Aguh said, decision-makers should consider how to “update the mechanisms by which [such rules] are propagated throughout the system.” 

Adjusting procurement-related regulations to make government partnerships more accessible and effective to pursue can help diversify agencies’ pick of potential vendors and startups to collaborate with, instead of relying on repeat partners that may not deliver the level of service agencies desire, Aguh explained. 

“This framework gives every city, county and state something they can do right now to remove the barriers that stand between them and partnerships with gapclosing startups to produce the impacts we all want and that citizens deserve,” the report reads.