£50m govtech fund to boost civic innovation

A new £50m fund to back digital innovation in public services is being developed by a former Downing Street advisor to David Cameron and some of the UK’s most pre-eminent venture capitalists. The fund is set to boost civic projects at home and abroad. Julian Blake reports.

korskiDaniel Korski, who quit Number 10 after June’s EU referendum, is leading the development of the ‘govtech’ fund, alongside VCs Eileen Burbidge of Passion Capital and Robin and Saul Klein of LocalGlobe. The fund is being raised purely from risk capital and has no state backing at this point.

Investors have been drawn to support tech innovations that improve the speed and efficiency of public services, on the back of much-admired modernisation in local government, including by the London boroughs of Camden and Barnet, and by arms-length agencies like DVLA, which is among those taking more than 250m paper transactions online.

Korski (pictured) was not available for comment on the story, trailed by Sky News on Thursday. But DigitalAgenda understands that the fund is going through a market assessment, ending before Christmas. Subject to Financial Conduct Authority approval, the new fund will come on stream next year.

Korski is known to be assembling a team to manage the fund that includes former UKTI chief of staff and Tech City UK director of strategy Caroline Makepeace, alongside the VC backers. ‘Queen of Silcon Roundabout’ Burbidge is a former business advisor to Cameron and tech advisor to Boris Johnson when mayor of London.

The £50m fund figure is understood to be “aspirational” rather than set in stone.

The fund will be used to support entrepreneur-led businesses that are driving innovation. “It won’t be about delivering services direct,” said one source. “It’s not about trying to create a new Capita.”

Dominic Campbell, the director of tech-led FutureGov, which helps local authorities change the way they deliver services and engage with communities, said the new fund offered “a huge opportunity”.

“The market is in the billions in the UK and we’re at a point where many technologies used in government are at end of life, but for a non-digital age,” he said. “Combine that with continued austerity of some kind under the current government and there’s an opportunity to really try to use digital to drive our costs from government while rapidly improving the user experience.”

FutureGov works with local authorities on digital transformation across the country, including in Camden, Essex and Medway.

A new government digital strategy, expected soon, puts govtech alongside fintech and edtech as key growth areas.

The government’s chief technology officer, Liam Maxwell, told last week’s Edtech UK global summit that, as a result of changes to the government’s digital marketplace supply chain, 52% of the £1bn in work on digital innovation for the public sector now came from SMEs, compared to 2010 when 85% of business went out to 12 companies.

dvla-office-entrance-1024x681Josh Russell, who worked at the Government Digital Service developing the market of government technology suppliers, and who leads the Citizen Beta civic tech meetup in London, said: “The opportunity for startups to play a part in government transformation has been bubbling for years, and a UK fund will really help to accelerate a growing base of new suppliers.

“Govtech is a relatively quiet vertical in the UK tech scene, and government has a huge need for a larger pool of innovative options. Match that with an aspiration to have a larger number of contracts going to SMEs and demand will need further supplying.”

But the reach of the new fund could go well beyond UK shores, supporting digital innovation in overseas aid, where philanthropists like Bill Gates have made inroads, and where blockchain technology is being deployed to cut out fraud and inefficiency in the delivery of aid. Emerging technologies like machine learning could start to play a more significant role in the sector through the fund, at home and abroad.

Korski was one of David Cameron’s most trusted business advisors, and a key figure in Downing Street’s ill-fated campaign to keep the UK in the European Union. He was awarded a CBE in Cameron’s controversial resignation honours list.