Five Things Governments Can Do to Encourage Civic Startups

2012 is shaping up to be the “Year of the Civic Startup.”

With the growth of the open government movement and more and more governments embracing open data, we see an increasing number of useful civic applications being developed.  Every weekend hackathon spawns multiple projects that could potentially live on as a successful venture or company.

Some hackathons are specifically geared toward producing viable companies – this is exactly the approach that was taken at last November’s “Education Hack Day” in Baltimore.  At that event, the idea was to set up winners with as much expert advice and opportunity as possible to launch a business around their weekend project to help teachers.

Generally speaking, a “civic startup” is a startup company with a focus on civic improvement or social good.  They look and act just like other kinds of startups, but their aims are somewhat loftier.  ElectNext and SeeClickFix are a good example of a civic startups – their aim is to become profitable and viable (just like other startups), but if these ventures are successful they will impact people far beyond their direct customer/user base.

Everyone benefits when voters are more engaged and participate more regularly in elections, or when city neighborhoods are cleaned up.  We all get something out of the success of civic startups like ElectNext and SeeClickFix , whether we use them directly or not.  In this sense, we can describe these kinds of startups in economic terms – civic startups are those that generate a positive externality.

Some civic startups are direct consumer of open government data, like RailBandit which uses data published by public transit agencies.  Other civic startups – thought this type seems especially rare – might potentially offer goods and services directly to governments through the standard procurement process.

There are ways that state and local governments can help startups and encourage the startup community.  Some governments (usually at the state level) provide early-stage funding for technology companies – the Maryland Venture Fund is a good example of this.  State and local tax policy can also be used foster and encourage high tech startups.  But these options have become more challenging for governments in recent years because of financial strain and tight budgets.

In 2012, I believe that state and local governments will connect the dots on open data and begin to see it as a viable economic development tool for encouraging the development of new businesses and the creation of civic startups.

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