Tumml recently hosted a roundtable on “Infrastructure & Startups” in partnership with Verizon and JP Morgan. The discussion brought together policy makers, tech leaders, and urbanists. Our goal was to answer the question, “How do you sell to or partner with government to solve infrastructure challenges?”
Our participants agreed that – regardless of your particular infrastructure solution – success in this space often revolves around (1) contracting with the right customer, (2) finding a sales channel partner, and (3) communicating positive community impact.
Contracting with the right customer
Identifying the right government customer can be a major challenge for infrastructure startups. Government stakeholders need to be “bought into” the relationship in order to make it work. A few tips:
- Master contracts: One startup noted that, in the Northeastern US, they created individual agreements with municipalities that bordered each other. The product roll-out was hampered by the sometimes conflicting needs of each city in the region. When expanding to the West Coast, they decided to negotiate a “master contract” with a number of adjacent cities. The regional agreement (with sub-agreements to meet the needs of each city) helped to drive consensus and streamline a chain of command for approvals – delivering a project that the whole region could get behind. As an example, Ford GoBike employed a master contract with the Metropolitan Transportation Commission and five Bay Area cities to operate the bike share system in the Bay Area.
- Generating inbound demand: Generating customer interest – particularly from the government – can be challenging. Another infrastructure startup used a “Reverse RFP” to source customers. They solicited proposals to be one of the first innovative cities to work with their startup. Through this process, the company was able to identify enthusiastic partners. And some of their best government clients turned out to be smaller cities that went “above and beyond” to roll out the product – putting up money for advertising and citizen education initiatives. Neighborly recently adopted this strategy for its new Environmental Impact Bonds Challenge. Two “winning” cities will work with Neighborly to structure, market, and underwrite financings to support green infrastructure improvements.
Finding a sales channel partner
Sales channel partnerships can also make the process of delivering private infrastructure improvements easier.
- Project management firms: A number of participants mentioned how project management firms, such as AECOM and CH2M, often serve as gatekeepers on important government projects or initiatives. It can be helpful to build relationships with these firms, as they often “pre-vet” and recommend service providers. For example, startups like GreenBadger (a LEED accreditation software tool) can look to these project managers as a resource to connect with potential customers.
- Technology service providers: Major government service providers, such as Microsoft and Verizon, often subcontract out to smaller vendors in order to meet contract requirements (for example, to meet minority and local employment thresholds, or to provide enhanced services). For example, big data startup Valor Water Analytics and smart metering company Aclara recently announced a formal sales partnership to deliver hardware and software for water utilities.
However, these larger channel partners come with their own challenges. Some speakers gave the caveat that between executive turnover and reshuffling of departments, it can be difficult to build an effective working relationship with a large corporate partner.
Communicating positive impact
We heard repeatedly from public officials in the room that it was critical for startups to communicate their value to government stakeholders.
- Show don’t tell: Infrastructure is critical for communities, so government must ensure that it remains accessible and operational. “Show me, don’t tell me, how you achieve public good,” said one regulator. Another public official noted the value of outlining your impact on “communities of concern,” demonstrating how a business could help the city achieve its equity-related goals.
- Mitigate risk with pilots: Government is not usually an early adopter. One participant suggested building proof points with private customers before pursuing government as a customer. An entrepreneur in the room noted that DARPA-like challenges (including non-dilutive grants) and designated “testing zones” for new ideas could facilitate innovation.
As a startup, selling to and partnering with government to solve infrastructure challenges can be hard. But building smart partnerships, targeting enthusiastic customers, and using data to communicate your community impacts can make the process easier.
Photo credit: Jerry Yang, Flickr Creative Commons