How to Evaluate Emerging Tech Fast
After all, the stakes are high.
A lot of the best technology has been developed for commercial purposes, not the government. Companies must innovate continuously in order to stay viable and of the highest quality in the marketplace, and the government needs to leverage this commercial tech to remain competitive globally. Access to these cutting-edge solutions is essential—especially during a crisis like the coronavirus outbreak—but working with private sector tech solutions can be risky. Or at least that is the perception.
The real question is: How do we conduct a thorough vetting of emerging tech solutions from the private sector to decrease the risk, while not stalling innovative progress? After all, the stakes are high. No one wants to take the blame for bringing in tech that can’t scale, ultimately wastes taxpayer money, and fails to better serve Americans. As the old adage goes, “No one ever got fired for hiring [insert mega-corporation here].”
How can government leaders mitigate risk and still get the cutting-edge solutions they need quickly? Start by taking a page out of a venture capitalist’s handbook.
The similarities between venture capital and the government are very strong. Both are writing sizable checks for capabilities that they hope to scale for big outcomes. For VCs, due diligence is arguably the most important part of the investment process. It’s a rigorous investigation of the investment opportunity as whole, including multiple phases to screen technical, financial, and operational factors. Investors know where to look and what to look for, which is why I encourage the government to “research like an investor.”
However, those in the private sector who evaluate commercial emerging tech companies don’t always know what to look for when it comes to the federal market. The government requires a special set of criteria for vetting commercial tech. Here are just a few.
Who has invested in the company? It’s a good sign if the investors are well known and well-respected. Bonus points if they know the unique constraints the government faces. Investors with experience in policy, government security, and emerging tech are a safer bet than a fund that has a small or very niche portfolio unrelated to the missions in government. Plus, foreign investments can increase risk to the government. Working with experts in the private sector who can help vet tech for national security concerns can be the difference between a solid investment and a non-starter.
A proven track record of success in the private sector is a promising indicator that the technology works and can scale to fit government needs. And success in the private sector could mean that a company is equipped to make the long-term investment required to scale in the public sector.
People Operations & Maturity
In addition to past commercial success, look to see how the company is setting itself up for future success. Is the team capable of handling rapid growth if it lands a massive contract, or will the company struggle to scale internal operations and processes and crumble under pressure? Make sure the team can weather the government procurement cycle and scale without bottlenecks.
Product Market Fit
A few factors need to align for a tech company to be worthy of working with the government. You need to ensure that the product-market fit is seamless. The way to determine this is by identifying the problem you want to solve, rather than prescribing the solution you want. VCs need to look at this across lots of markets to identify product-market fit. Luckily, you only need to think about specific government problem sets.
Federal Market Commitment
At Dcode, we work with emerging tech companies to ensure they understand how government contracting works so that the best technology actually makes it into the hands of those who can use it. While companies may not have a complete picture of the challenge and timelines associated with the government market, if the leadership and board are committed to making it work, the likelihood of success is much higher. Companies without this kind of buy-in, even the fastest-growing, venture-backed firms, will surely pivot away from the market when the going gets tough, leaving government missions at risk.
These are just a few of the indicators that agencies can use to assess the likelihood of success of an emerging tech company in the federal market. At Dcode, we use a rigorous set of criteria to determine whether or not a company is ready to solve government mission challenges because this is a vital step to get right without slowing down progress. Conducting due diligence like an investor with an eye toward the factors that pose the most risk for the government will make sure you work with the most promising commercial emerging tech available today.
Meagan Metzger is the founder and CEO of Dcode.
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