On NordicBaltic.Tech, a partnership between PUBLIC Denmark and the Nordic Council of Ministers, we have been covering the impact of the Covid-19 crisis for startups over the last couple of months. In our discussions of how startups are helping support the most vulnerable Nordic and Baltic citizens during the crisis, the role that technology can play in addressing large scale societal problems has become apparent. Technology, delivered by startups, that enables a more effective and efficient delivery of public services is what we refer to as GovTech. Many of the HealthTech, EdTech and social care startups we have highlighted in the past months belong to the class of ‘GovTech’ ventures. The Covid-19 crisis has resulted in an increased interest in GovTech across the Nordic and Baltic region, with some sub-sectors such as HealthTech and edtech seeing an especially large increase in uptake.
Increased interest in GovTech
As we discussed in our article last week, the insights from our databases indicate that the future looks bright for the GovTech sector. As a result of the challenges posed by Covid-19, governments are starting to take a keen interest in the potential for GovTech and actively seeking to work with innovators and entrepreneurs.
Our data indicates that public officials across the whole Nordic-Baltic region are becoming more aware of the impact technology startups can have on the delivery of public services and are seeking greater engagement with the startup ecosystem. 47% of officials that responded to our call for engagement said that they are looking to connect and work with startups, and just under 30% said they want to tap into innovation networks. The public officials who responded represent a wide range of government bodies, from national departments for infrastructure, trade, health, and regional development, to municipal and local authorities.
Conversely, entrepreneurs and innovators have become acutely aware of the benefits they can offer to the wider public sector, citizens and society. Many startups have become aware of GovTech as a sector filled with opportunities: 53% of startups that responded to our call for engagement said they would like to increase their level of engagement with public officials, and startups who currently work with government said they would like to do so more.
A changing procurement landscape
One of the challenges that GovTech startups seeking to work with the government face is the complexity of government procurement processes that one needs to go through to sell goods and services to the government. The Covid-19 crisis has shaken up the procurement landscape by presenting a need for governments to quickly buy goods like PPE (personal protection equipment), medical equipment and services from the private sector. Many countries around Europe have now adopted ‘emergency procurement’ rules that simplify and accelerate existing procurement processes.
In Norway, the emergency procurement “COVID” Act provides a basis to make exemptions temporarily from the existing Law and Regulations on public procurement. The Ministry, in addition to the Digitalization Agency has provided guidance on how to procure during the crisis. The Ministry of Finance has also permitted contracting authorities within the State to pay suppliers before the due date.
In Denmark, the Parliament adopted a temporary Act on Danish municipalities’ and regions’ procurement procedures under the COVID-19 outbreak. This act gives basis for the relevant Ministry to set out temporary regulations regarding the municipalities and regions procurement procedures under the COVID-19 outbreak.
While these legislative changes are meant as temporary measures, if successfully applied, they might spur long-term changes in the procurement process, making it easier for fast-paced tech companies and startups to work with governments.
New funding for EdTech
Investment in edtech across Europe has rapidly grown over the past five years, passing the $1billion mark last year and the Covid-19 pandemic is set to accelerate that growth. When lockdowns were announced across the Nordic and Baltics, schools, colleges, universities and other education providers moved quickly to implement tools to enable remote learning. This has made the uptake of edtech tools grow at an unprecedented rate. For example, Google Classroom saw a 400% increase in active use since the start of the crisis, while Duolingo experienced a 60% increase in users.
The edtech boom has not gone unnoticed by investors in the Nordics. The Helsinki-based VC Sparkmind.vc is launching a €40 million edtech venture capital fund, claiming to be the first of its kind in the Nordics. The firm hopes to reach a €60 million final close by the end of 2020. With its first fund, Sparkmind.vc will invest anywhere from seed to Series B stage in businesses across various educational sectors, from early childhood and K-12 to corporate and lifelong learning. Their first investment is in Finnish startup Fuzu, a career acceleration platform focused on emerging economies. The €3.4 million Series A round, led by Sparkmind.vc, will speed up Fuzu’s expansion to new markets. While focused on Northern Europe, Sparkmind is not limited to it; the firm is open to investing in edtech startups from other European regions.
Digitisation of healthcare services
The Covid-19 crisis has led to a massive surge in demand for remote healthcare apps and platforms across the Nordic and Baltic region. Kry, the Swedish telemedicine company that allows for digital consultations with qualified medical professionals, has seen a huge spike in downloads as GPs close. App downloads are up 61% compared to the same time last year and consultations are up 80% for the same period The startup has even launched new products, including a free coronavirus symptom checker.
Another Nordic tele-health provider, SidekickHealth, has also seen a substantial increase in interest in its services. It has recently provided the Icelandic Emergency Management Authorities with a nationwide COVID-19 program to remotely triage and manage infected individuals in their homes. Through the application installed on their mobile devices, patients can self-report on a panel of symptoms and measurements on a predefined schedule, multiple times a day if needed. Meanwhile healthcare professionals can monitor and manage patients through a dashboard which alerts them when action is needed to be taken. The increased demand for tele-health and other HealthTech solutions has meant that while overall VC investment across the Nordics and Baltics has slowed down due to the crisis, with 55% of Nordic startups indicating that Covid-19 has caused difficulties with current or upcoming funding rounds, investment in the healthcare sector has remained relatively stable. A survey of the 24 leading HealthTech VCs investing in Europe by Optimum found that there is “a substantial amount of money” on offer. All the VCs polled – which collectively have holdings of around €15.5 billion in the EU healthcare sector – said they are actively looking to invest in new ventures, with six VCs having recently raised €2 billion in new funds.
Nordic and Baltic GovTech solutions go global
An accelerated uptake of digital health solutions across the globe has presented Nordic and Baltic GovTech startups with a focus on the healthcare sector with opportunities to expand globally. In recent months the Copenhagen-based AI healthcare startup Corti has rapidly expanded to the US. Corti’s tools analyse 911 calls in order to help emergency healthcare staff diagnose and treat conditions like cardiac arrest and stroke.
Corti’s AI technology is now being used in a Covid-19 trial run by American healthcare services, to analyze data on 100,000 Covid-19 cases, which comprise a patient’s status from the ambulance to a respirator. The aim of the trial is to help healthcare providers optimally allocate scarce testing kits and protective equipment. If successful, the trial could be followed by a roll-out across Washington state. Other potential uses of Corti’s tech include detecting coronavirus hotspots and helping triage Covid-19 patients and cases with related symptoms, like the flu.