Investing in SeamlessDocs for the Future of Government
State and local governments spend tremendous sums of money on goods and services — over $100 billion annually on IT products alone. Yet despite such a large potential market, it is relatively rare to meet tech startups selling directly into city and state agencies.
There are good reasons for this. Forty-thousand American cities and towns use a myriad of procurement systems, and companies fortunate enough to win contracts often endure lengthy delays receiving payment (which is especially dangerous for a cash-starved startup).
Successfully working with one city does not necessarily make it easier to sell into others. For all these reasons, local government is not generally seen as an easy market for startups to scale.
But that does not mean that public officials are resistant to startups. On the contrary, I have found that most mayors and agency directors are eager to meet entrepreneurs offering innovative solutions to public problems.
Recently, I gave a tour to a dozen mayors visiting 1776’s campus in Washington, D.C. and introduced them to a few of our member startups. The mayors were particularly enthused about SeamlessDocs, a startup whose software converts local government permits from “dumb” pdfs into smart, sleek, cloud-based forms. One mayor from Illinois exclaimed,
“This is exactly what I’ve wanted — I just didn’t know it existed!”
As a former city official myself, I felt the same way when I first heard Jonathon Ende, SeamlessDocs’ CEO, pitch his company two years ago. I had never before seen a startup that offers such clear benefits to both residents and government workers. SeamlessDocs soon became one of the first investments 1776 made.
Citizens can use SeamlessDocs to complete business licenses or request parking permits through mobile or web browsers without worrying about losing printed documents or that their handwriting might be illegible. Local agencies save money in the process — an average of $40 per form submitted by a resident — and staff enjoy a much simpler system to process and file forms.
SeamlessDocs currently works with hundreds of local governments in 45 states, and it averages more than one new city customer per day. That pace is very unusual among startups selling into local government, but it’s not impossible.
SeamlessDocs has been able to grow rapidly by addressing a clear and present headache for local residents and government workers alike — inconvenient, inefficient government forms — and also by pricing its product in a way that allows local leaders to ink deals quickly.
Venture capital has taken notice. SeamlessDocs just closed a Series B investment that 1776 was proud to participate in alongside Motorola Ventures, Urban.us and GovTech Fund.
SeamlessDocs recently leveraged its success at the local level to hire Dan Tangherlini, the former Administrator of the General Services Administration, to lead a new division focused on providing similar solutions to the federal government, which spends over $80 billion annually on IT. The opportunity to work with federal government is particularly compelling, as words like “simplicity” and “ease” are not common in conversation about forms like federal tax returns.
Supreme Court Justice Louis Brandeis famously remarked that the federal government relies on state and local government to serve as “laboratories of democracy” by experimenting with new, potentially scalable solutions. Brandeis was referring to innovative policies, but his observation seems equally relevant for startups.
There is a long history of progressive state and local policies nudging our national government forward: current examples include same-sex marriage and the Affordable Care Act. Why not expect the same impact from startups improving our cities?