• Technology has enabled startups to disrupt major industries and sectors across the economy – from finance to commerce and healthcare.
  • Quick and innovative solutions from HealthTech startups became invaluable when the COVID-19 pandemic hit.
  • One sector that startups often overlook is government, and it needs disrupting.

GovTech has been on the rise over the last few years, and denotes the use of emerging technologies by startups and SMEs to solve public sector challenges. However, the idea of a GovTech startup is still a novelty to some.

Public procurements and ways of working in the public sector often seem to be tailored to large established companies that can accommodate a slower development process. But the status quo is changing quickly.

Startups have been working on novel solutions to increase citizen engagement, provide governments with better data from dealing with waste management to detecting tax fraud or simply offering tools for more effective day to day work.

Governments, accelerators and investors around the world have taken note of the potential of GovTech, both in terms of economic growth for startups and SMEs and the transformational potential of bringing public services to match the needs of 21st-century citizens.

Lithuania strives to lead the global GovTech movement

Although Lithuania’s performance in the GovTech field remains limited, the success of startups such as Trafi, Interactio and Mindletic suggests it has the potential to become a hub for innovation with a public purpose and public clients.

Trafi, a smart city solution for real-time mapping of public transport, is now a key platform in Lithuania but also in Germany, Indonesia and Switzerland. Sifted, a website on prominent startups backed by the Financial Times, selected Trafi as one of the main startups to watch in 2020.

Interactio – a smart translation solution – has signed clients such as the European Commission, aiming to lower their levels of bureaucracy. Meanwhile, Mindletic has won numerous global competitions such the Hack the Crisis Hackathon and Global Hack where it scooped second place. It focuses on mental wellbeing in the workplace.

Despite these successes, many structural problems persist, slowing down the innovation in the public sector and the growth of startups in this field.

The world over, a lack of innovation culture or digital skills often precludes public-sector officials from looking for out-of-the-box solutions. Although there are many new ways to procure innovation, established public procurement practices often tip the scales when more risky innovative procurements are suggested.

However, in 2019 Lithuania’s government made a strategic decision to be at the forefront of GovTech innovation, aiming to mirror the success of the country’s fintech sector development. The GovTech Lab was launched, focused on opening up the public sector to innovative ideas.

The team at the Agency for Science, Innovation and Technology now serves as a connector between government challenges and startups or other innovative companies. December marked one year of its existence and the end of the second iteration of the GovTech Challenge Series – an accelerator for public sector institutions and companies to build digital solutions that solve social challenges.

Although many structural problems still exist, the influx of GovTech solutions shows positive trends. Innovative GovTech solutions are currently being developed in the accelerator that hope to mirror the success of Trafi, Interactio and other global startups.

Oxylabs is now working on an AI solution to automate illegal content detection on the internet. Such tools could then be used by regulators and law enforcement to ensure that more harmful content is detected, and any possibly dangerous websites are shut down much faster and more effectively than is currently the case.

Other startups focus on fostering the potential of big data to make the right decisions around improving health at schools. One is Green Thyme, which is building Lithuania's first intelligent public-health monitoring system for schools in Vilnius, the country's capital.

Cross-country collaborations

Vistalworks, a Scottish startup and also a product of the GovTech accelerator, is building a tool to detect dangerous products in goods sold online. It has already developed software to target illicit and fake products being sold online in cooperation with Scottish and Estonian governments and is now working with the State Consumer Rights Protection Authority of Lithuania (VVTAT) to expand the solution.

According to a study made by the trade association Toy Industries of Europe (TIE) in June last year, a staggering 97 percent of the toys bought through the most popular online marketplaces did not meet the EU’s toy-safety rules, which makes such solutions invaluable for the regulators.

A difficult but rewarding way forward

While the total of ten solutions so-far developed through the GovTech Challenge Series might not sound a lot, for a rather small market like Lithuania it is a big first step in breaking down the barriers and stereotypes surrounding startup and public-sector cooperation.

In March 2021, ten more new challenges were launched and are looking for startups to step in with their solutions. Step by step, the wave of innovation is penetrating Lithuania‘s public sector.

With increasing demands from citizens and accelerated digitalisation brought about by the pandemic, GovTech solutions are needed both as a source for better public services and as an economic opportunity for businesses. GovTech Lab has put Lithuania on a global GovTech map and accelerated the spread of out-of-the-box ideas in the public sector.

Lithuania’s new branding strategy “Co-Create” provides a great take-off point to affirm GovTech and the co-creation of innovative solutions as a strategic goal for Lithuania. However, for the GovTech ecosystem to flourish, the job is far from over.

Lithuania’s public sector, just like that of many other countries, must continue to build its digital skills, embrace experimentation through innovative procurement methods, and set aside budgets to look for creative solutions to complex technological challenges.

Only then will GovTech startups be able to work with a broad range of public sector institutions and find opportunities in areas that require a truly innovative and entrepreneurial spirit.