07 Jul 2020

The Practical Optimist – our newsletter for investors interested in tech for good

By Paul Miller

We’ve just launched a monthly newsletter for individual and institutional investors interested in tech for good. It’s called The Practical Optimist and each month we’ll introduce a topic and share interesting links to articles and events to help readers learn more about this growing movement. Last month’s topic was the diversification of business models that tech for good investing provides (see below). If you’d like to sign up for future editions please do so here.

 

Startups serving the public sector could be a strong bet in a post-Covid world. 

There’s no doubt that the impact of Covid-19 will be far reaching on many industries. For investors, the pandemic has brought to light the importance of diversification by way of business models. Investors who restrict themselves solely to B2B or B2C are more vulnerable to having their whole portfolio affected by crises like these.

The strength of tech for good however is its applicability in many markets, including the public sector. The public sector is already there to have a positive impact, technology can help it better fulfil its purpose – and do so at scale. 

Private sector companies being paid by the public sector purse can be controversial. But we think mission driven founders are better positioned to act fairly and ethically. This isn’t about outsourcing. It’s about being an effective technology partner to the public sector, from schools to local government.

Covid-19 has jump-started the process of many public services adopting digital solutions. As the FT reported, two BGV backed ventures – DrDoctor and Hospify, were perfectly positioned to respond to the ‘digital transformation sparked in Britain’s health service.’ We’ve seen a similar story with many of our other ventures too.

Looking at the split of business models in our active portfolio, classified according to their primary source of revenue – over 80%, those with the public sector as their customer are the largest group. 

 

*Hybrids are companies where there is no source of revenue larger than 80%. 

Even some of the most trenchant economic liberals acknowledge that now is more a moment for Keynes than Hayek. We’ve seen that startups are able to help improve public services even in times of austerity. So no matter what happens in the economy over the coming decade, we think investing in public-sector-serving companies gives tech for good a real edge in the VC market. 

 

Sign up for future editions of The Practical Optimist.