Christie George is director of New Media Ventures, a national network of angel investors who support media and tech startups. Below, she writes about Knight Foundation’s recent analysis of the civic tech field. Photo credit: Flickr user zabdiel.
We are at an unquestionably exciting moment for the field of civic innovation. Knight’s recently updated report, “The Emergence of Civic Tech: Investments in a Growing Field,” helps define and organize the emerging civic technology space.
There is power in naming, and by taking a big tent approach, the report allows all of us—entrepreneurs, investors and foundations—to see where we fit in a larger context and to test our own assumptions about what the sector is (and is not). A few observations about the report and its corresponding conclusions about the civic tech sector:
Three key takeaways
1. A great first step. The Knight report is a helpful entry point to anyone looking to become involved in the field. Unlike traditional landscape analyses, this one is dynamic, inviting practitioners to expand the study with their own data. Much has been written about what was included under the study’s definition of civic technology. The peer-to-peer cluster, with its sizable investment rounds, has come under particular scrutiny for not being sufficiently focused on civic engagement as a primary activity to be included in this analysis. But as important as what is included in the analysis, is what may be left out. I particularly appreciate how proactive the Knight team has been in soliciting feedback, and I would encourage readers to take them up on filling in those gaps.
2. The field is young, and impact takes time. Knight has invested more than $25 million in civic technology since 2010; and this expanded analysis only covers organizations that received funding between January 2011 and December 2013. While tech startups can scale quickly, it takes time for companies to find their footing, especially groups in such new spaces. Many of these organizations are still searching for their business models, much less their impact.
3. Foundations are critical. The report notes how peripheral foundations have been, rarely co-investing with the most active individuals and institutions in the civic tech space. My takeaway from the report is how critical foundation support has been to areas like voting and public decision-making that don’t typically attract commercial investors. Many civic investment opportunities may not have traditional growth models or exit potential, and foundation funding can provide essential risk capital to get civic innovation efforts off the ground.
Some things I’d like to see next:
1. Measuring Impact: The Knight report focuses on financing as a way to size the civic technology market. If we are hoping that more resources flow into the civic tech space, sizing the market is part of the equation. It is also true that financing alone is an inadequate proxy for the value of civic technology. So I wonder whether we could use the same rigorous approach of the study to approximate the respective impacts of these organizations, or even the market as a whole. For those of us thinking about impact, the combination of investment plus impact data could be incredibly powerful. And while impact is notoriously difficult to quantify, much less compare, as the field ages, what should we reasonably expect from companies that identify as civic innovations? Exits? Lives changed? What kinds of proxies should we focus on, and what should we steer away from as sheer vanity metrics?
2. Business Model Innovation: One reason why certain clusters attract larger pools of capital has to do with the business models powering these organizations; there is a clear value proposition from an investment perspective. And while profit maximization will not and should not be the goal of all civic technology ventures, there are business model innovations that could increase the sustainability of organizations across the civic tech space. Are there ways that the Knight analysis can help spur not simply stronger coordination among co-investors but better information sharing among entrepreneurs as well? For example, the consultancy SustainAbility recently issued Model Behavior, highlighting 20 business model innovations for sustainability. Could a future iteration of the Knight project profile business model and impact innovations for civic engagement?
3. Vehicles for Co-Investment: For those of us who are interested and active in this space, the report tees up important strategic questions about where we should place our own efforts. One of the most fascinating aspects of the report is the section on investor analysis. Here at New Media Ventures we are grounded in a network model of bringing investors and donors together; we are founded on the idea that we can have more impact together than we can alone. But co-investment can be challenging in practice, given the sometimes divergent impact and return expectations of different kinds of investors, who often use entirely different language as well. It would be great to see specific examples/models for co-investment –perhaps pooled funds dedicated to civic tech as a mechanism to encourage co-investment between philanthropic institutions and other types of investors.
The report makes clear that the civic technology sector is dynamic and diverse but highly atomized. In the absence of information about the breadth of activity in the space, this report plays a critical signaling role to newer players who may be considering civic technology as a program area for grantmaking or investment. And by giving all of us something to react to, the report is a great first step in organizing this nascent field.