Andreessen Horowitz Bets on a Government Software Start-Up
By WILLIAM ALDEN
DealBook
New York Times
May 15, 2014, 12:12 pm
The venture capital firm Andreessen Horowitz has invested in a range of software companies, catering to different types of customers.
The firm can now add a new category to that customer list: governments.
OpenGov, a start-up that sells software to help local governments manage data, announced on Thursday that it had received a roughly $15 million financing round led by Andreessen Horowitz. It is the first time that Andreessen Horowitz, one of Silicon Valley’s leading investment shops, has backed a company in the business of “govtech,” to use the industry parlance.
Local governments have suffered in the aftermath of the financial crisis, with many forced to lay off workers and cut back on services. But Andreessen Horowitz sees an opportunity in that market.
Government software is “kind of old,” Balaji Srinivasan, a partner at the venture capital firm, said. “So we think we can do a lot there.”
OpenGov would not disclose its revenue or its valuation in the financing round. But the company, which was founded in 2012 and started selling its software last year, says it is rapidly adding customers across the United States. As of Wednesday, 96 governments were signed up, according to Zac Bookman, the co-founder and chief executive.
The software, which is delivered through the cloud, is priced according to the size of the government, Mr. Bookman said. A small town might pay as little as $2,000, while a big city could pay about $25,000. The company’s biggest customer, he said, is the City of Los Angeles, but it also has a number of smaller cities like Anaheim, Calif., and Springfield, Ill.
Two venture capital firms that previously invested in the company, Formation 8 and Thrive Capital, participated in the latest financing round. A partner at Formation 8, Joe Lonsdale, is OpenGov’s chairman.
OpenGov does not work with the federal government, but Mr. Bookman has ambitions of doing so. George P. Shultz, who was a Treasury secretary in the Nixon administration and a secretary of state in the Reagan administration, is an adviser to the company, as is Byron L. Dorgan, a former United States senator.
“I suspect that before too long, we’ll be signing a contract with a federal agency,” Mr. Bookman said.
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