Startups often struggle to get their first pilot and reference customers, which discourages many entrepreneurs and investors from pursuing opportunities that involve selling to cities. What can cities and startups do to navigate current procurement processes and improve them?
– Shaun Abrahamson, Smart City Startups 2014
After having 12 years experience both selling to the government and procuring for my police department, I realized that selling to government agencies, especially large agencies required collaborating with an established partner. Most government agencies are not ready to award a contract to an unproven vendor even if the vendor’s solution represents a viable remedy for the agency’s problem. Government officials prefer to align themselves and their organization with an established vendor where the risk for that agency is minimized and chances for a “failed project” are reduced.
As a start-up company, your chances of securing a government contract are low. In an effort to win bids and RFP’s, start-ups should collaborate with a larger entity. The larger organization gives them instant credibility, and allows the larger agency to take on the risk. A partnership also allows:
- The larger agency to secure the bid bond, insurance, & any other special conditions
- Assistance to the start-up in their effort to meet requirements and validate experience
- Provisions for extended payment terms since most start-ups are cash sensitive: i.e. net 45-60 days
- Gives the start-up the opportunity to fulfill a portion of a larger project; one that they may not have the ability to respond too alone
- Shared resources, large companies can handle multiple projects at a time, start-ups have limited resources and cannot bid on multiple project initially
- Government agencies the opportunity to meet minority/small business obligations.
Above are a few examples of the benefits that start-ups receive when collaborating with an established business. Without a partnership, startups or small businesses face an uphill battle working with government agencies.