The Victorian government is investing $2.5 million into a new Victorian startup accelerator specifically aimed at helping startups secure government procurement contracts.
Led by LaunchVic, Victoria’s government agency responsible for startups, the CivVic Labs Accelerator is intended to open up more opportunities for startups to provide products and services to the state government, by addressing specific challenges.
The program was born out of issues brought up at a stakeholder engagement forum: while the government is procuring a significant amount of goods and services from the private sector, it is difficult for startups to access these opportunities.
The first program, set to run over this financial year, will ask government departments taking part in the program to define a public sector challenge that would benefit from a startup’s technology and thinking.
They will then work with startups to co-design and test solutions in a “de-risked sandbox environment”, with the program looking to offer a path to procurement.
The program will accept 16 startups in its first cohort, with participating startups to be co-located with government staffers.
The accelerator will support 16 startups in an intensive 12-week program through an initial pilot, running in this financial year, followed by two additional programs running between now and 2020.
LaunchVic chief Kate Cornick states that this latest funding initiative is a decisive response to demand.
“If there’s any way large organisations can be helpful to startups it’s giving them an opportunity to test a minimum viable product or even better, the opportunity for a procurement,” Cornick says.
While LaunchVic often gets requests from startups for help with connecting to large organisations, “when we’ve run consultations, the one thing that comes up is government”, she adds, “because government doesn’t procure from startups often”.
The Victorian government has “huge purchasing power”, Cornick adds, but startups are often excluded from those opportunities “because they don’t have a history and because they’re too high risk”.
“Going to a larger, well-known, trusted firm might cost you more, the technology might not be as modern, but it’s a safer option,” she says.
Through the accelerator program, the state government will put out challenges for startups to respond to, Cornick says, and startups will be accepted into the accelerator based on their ability to address those challenges.
However, while the goal of the initiative is to help startups secure lucrative contracts with the state government, it’s also about getting startups that crucial first client.
“What it does for those startups is to give them a footing from which they can go to other governments and sell their products and services with a very strong client,” Cornick says.
“Being able to have a really strong first client … positions startups well for long-term success,” she adds.
As more startups start working with government, Cornick believes we may see a shift in the risk appetite in the public sector, opening up more opportunities for government and the startup sector alike.
This week’s funding announcement is the latest in a string of initiatives from the Victorian government to boost startups in the state.
This year alone, LaunchVic has pledged $2.4 million to boost regional Victorian startups, funding 15 projects across 26 local government areas; backed four new accelerators designed to get Australian startups onto the global stage; invested $500,000 to bring international startup experts to Victorian co-working spaces; and funded a new startup conference in Geelong, to the tune of $175,000.
Also looking to open procurement opportunities to startups, the NSW Government had in late 2016 announced it was increasing its innovation procurement threshold from $250,000 to $1 million.
This allows state government agencies to engage suppliers through direct negotiation on short term contracts valued up to $1 million, including GST, for proof of concept or outcomes-based trials. A competitive tender process takes place once a trial is complete.