I’m often told that members of local government are unsure whether to trust startups. They look and feel good - but they’re a startup and that means they are risky, right? I sometimes question whether this uncertainty doesn’t just come from stereotypes of the industry, but from the difficulties that arise when needing to evaluate a small company. We know what a good consulting firm looks and feels like - we spend all day around them. But what does a good startup look like?
Here at PUBLIC we interview over 400 startups a year and spend days on days evaluating and debating the question of what a ‘good’ startup for local government looks like. Here are a few quick questions to ask yourself to help work out whether this is a startup you want to work with.
1. Does this person know the problem as well as you?
Unlike consultancies or digital transformation firms, startups are built to solve one problem. It could be reducing the amount you spend on customer service, or helping your town or city tackle air pollution; the company is built to solve one pain-point you are having. If the person across the table from you doesn’t know that pain-point as well as you, or at very least doesn’t have a strong understanding of the problem, then that is surely a warning sign. How can you trust that a product will tackle your issue if the person who built it doesn’t know what your issue is?
By contrast, an entrepreneur who can convincingly demonstrate an awareness of the problems you are having, understands what is causing them and the resulting pains, is much more likely to able to offer an effective product. This is the first step to being confident that you’re working with a startup you can trust.
2. Can they explain how they will solve your problem in a way that makes sense
Startups will often use modern, at times complex technology - artificial intelligence, machine learning, blockchain. However, this shouldn’t mean you can’t understand what it is that they are doing. Even complicated technology can be explained in a way that makes sense to non-technical individuals; a good startup will be able to explain what their technology does at a high-level in a way that will at least give you an outline of how they will solve your problem - if not the full, ‘in the data’ solution.
Part of this answer will lie in salesmanship. Some people will be better than others at describing complex information in a simple way. But all startups should be thinking about how their product will be understood by and work for their users - i.e. you. If they haven’t taken the time to work out how best to communicate what they do to you, that does not bode well for an ongoing relationship.
3. Do they have case studies or evidence of how they have solved your problem in the past?
One of the easiest ways to be confident in a startup’s ability to meet your needs is evidence that they have done so for others in the past. Has this startup worked with local government before? If so, what were their results? Do they have case studies? What did they learn? It is not unreasonable to ask a startup to connect you to a former client in another council; contact this client and find out what they thought of the company’s ability to deliver. It is one of the easiest ways to gain certainty.
If a startup hasn’t worked with a local council before, don’t worry - everyone has to start somewhere. Ask if they have other forms of evidence - test data, for example, or contracts in other, similar industries. If they do, a pilot or trial is often a good way to try out what the startup is capable of delivering before signing a longer term relationship.
4. Do they know the relevant security & commercial necessities for working with the public sector?
Working with the public sector is different to working with the private sector. There are different commercial structures that need to be adhered to and different technical security standards that tech products must meet; a good startup that is committed to working with local government should know what these are.
Does the startup have ISO27001 and information governance procedures (and any additional security standards needed for your field)? Are they on G-Cloud or a similar framework? Not only are these good badges of professionalism for a company, but they will speed up and ease any procurement process you may later decide to go through with the startup.
Even if the startup has these commendations, it is still good to ask them questions as to technological robustness and data privacy. What is their outlook or approach? Have they thought this through? If you do not feel comfortable doing this, find a colleague with relevant expertise.
In an age of Carillion collapses and G4S abuses, there is no reason why a well chosen startup should be seen as more risky. In fact, with the rapid pace of technology improvement, picking small, agile companies that will grow and improve over time is a good way to insure yourself against legacy lock-in. Don’t feel uncertain when talking to startups, they are just as easy to understand and evaluate as any other supplier.
Edd Elliot is head of growth at PUBLIC