On May 14th Greentown Labs hosted the fifth and final event in our strategic partnerships speaker series. This night we focused on the potential for forging partnerships between startups and municipalities or state governments. Paul McManus, Senior Lecturer in the Strategy & Innovation Department at the Boston University Questrom School of Business and Greentown Board Member, moderated the discussion. Panelists included:
Jeremy McDiarmid, Senior Director of Innovation and Industry Support at MassCEC
Cameron Peterson, Manager of Clean Energy at the Metropolitan Area Planning Council (MAPC)
Oliver Sellers-Garcia, Director of Sustainability and Environment for the City of Somerville
Professor McManus started the discussion by finding out who was in the audience and what they were interested in. The audience included startups from the Boston ecosystem, professionals from municipal governments, and community members. Initial questions focused on how to partner with municipalities, how to win a request for proposal when a company doesn’t have a long operating history, and the importance of data collection for startup growth. After a round of introductions by the panelists, they launched into addressing some of the questions and explaining the challenges and opportunities in these public-private partnerships. Here are some key points raised during the discussion:
Q: How do startups engage with municipalities if they have the will? And how do they find interested partners?
Working with municipalities across the eastern part of the state, Peterson has seen an increasing interest from municipalities to try to connect with startups. A large part of the challenge is figuring out where to look. While municipalities have requests for information (RFIs), there is no clear central repository of these. She suggested getting connected with MAPC’s newsletter or looking at the Operational Services Division’s website to explore how to gain access to procurement requests. In the procurement process, she also pointed out that startups sometimes have an advantage where there are no alternatives to their product. In this case, traditional procurement processes that demand a cost competitive bidding process can be avoided.
Sellers-Garcia added that startups need to look at the issue from municipal workers’ perspectives. While there is interest from municipalities, they often cannot afford to buy the coolest new widget or service without support of partners such as MassCEC, Fraunhofer, or others who are either able to provide technical guidance or financial support. If startups are able to see this perspective it will help them understand how to craft an agreement where municipalities can be excited about being a partner.
Q: With Somerville, there are some contracts that would pay for themselves through cost savings. Why aren’t these types of contacts being acted on?
Sellers-Garcia responded for the specific example. Somerville has a fair number of historic buildings that it continues to maintain as part of its municipal stock, but there is a lack of clarity about how or if these buildings will be used in the future. While energy retrofits might lead to savings, they may not make sense given future plans for the building.
McDiarmid spoke more broadly about the importance of establishing a relationship with someone in a municipality with a smaller project before launching into a full contract. MassCEC’s Innovate Mass Program helps with these types of collaboration by providing funds for pilot sites that can decrease the risk for the municipality and allow the startups to get the data they need to grow.
Peterson saw cost savings contracts as being very similar to performance contracts. Even if there is a savings for the municipality, this will need to go through a competitive procurement process because there might be other companies that can provide an equal or greater savings for less cost. The standard process of procurement can be less nimble than a request for a test site or a technology that lacks competitors.
Q: When thinking about the difference between providing a good or a service, are there different criteria for procurement? Is one more or less stringent than the other?
Peterson answered that costs vary depending on the statute being used. In general there is more competition for providing a given service, and so this can lead to a much lengthier procurement process. This led to a discussion about whether there is much hope for collaboration between startups and municipalities, given municipalities’ pace, the lack of funding many of them have, and the immediate needs of startups.
McDarmid expressed a lot to be hopeful for these types of partnerships. While the challenges are real, there is also a growing interest from municipalities to learn how to connect with the innovation ecosystem. Peterson echoed the sentiment: “we are really excited for cities and towns to work with you guys.” Sellers-Garcia sees Somerville as being a leader with their recent RFI for startup needs. The first partnership to come out of the RFI was with Understory Weather, a Greentown Labs member company. They installed their weather stations atop municipal buildings, providing the municipality with free, hyper-local weather data while the startup gains an essentially free test site, where they can continue to make hardware and software upgrades.
Ending on that positive note the panel took a few more questions. The message from the discussion was clear: while there are challenges, there are great opportunities here to get first customers and test sites through municipal government. Each of the panelists is working to provide resources in their own domain to nurture these relationships and allow municipalities to act as a new and important resource for Massachusetts startups.
This concludes Greentown’s speaker series on strategic partnerships – check back in for other upcoming networking events and speaker series!