09 May 2023

It’s no secret that we here at democracy-technologies.org are firm believers in the potential of ‘Democracy Technologies’ (DemTech). We’ve cast our votes on it, so to speak.

But there’s more than just enthusiasm and a gut feeling behind that vote. The market for DemTech really is growing. Here’s some of the evidence.

Investments in DemTech companies

Let’s start at the beginning. DemTech, has been (and is still by many) seen as a third smaller circle in a venn diagram, cutting across, and yet dominated by, GovTech and CivicTech.

But things are changing. What was a minor point of overlap is rapidly getting the attention of big-time investors.

Compare the following.

CitizenLab raised 2.1 million euros for its series A in 2019, according to Crunchbase. They are almost universally recognised as one of the leading and most prolific players in the market.

Flash forward only a couple of years and DemTech companies are starting to draw raises in the tens of millions and showing signs of growth trajectories that get the attention of the venture capital market.

“We’ve doubled in size every year. We’ve raised 50 plus million dollars in venture capital. We’ve had access to the markets in a way, because we’ve had the growth that meets the metrics that VCs want to see,” says Michael Simon, Vice President of Strategic Partnerships at ZenCity.

That sort of paradigm shift is occurring internationally. From the US, to Europe and Israel, DemTech companies are finding themselves the subject of greater interest.

“The investment opportunity takes the form of governments’ $8 trillion annual procurement budget, $400 billion of which is spent on technology alone,” writes Apolitical founder and CEO Robyn Scott in a Wired article from 2020.

“The mobilisation of capital behind democracy will be inevitable.”

Growth and acquisitions in the Democracy Technologies market

Beyond investment, there are plenty of other numbers in support of a growing market.

CitizenLab itself has grown in leaps and bounds, more than doubling in size since that last raise. They estimate that the potential market for DemTech in Europe alone may lie in the hundreds of millions.

“If we look at local governments in, let’s say, a technologically mature environment and mature position, as in they have sufficient size and are in countries that have a higher degree of digitization, you’ll get to about half a billion,” says CitizenLab founder and CEO Wietse Van Ransbeeck. “However, if you ask me what the amount spent today is, I would say probably close to 25 to 50 million.” 

“I think it’s still very early days. There are many governments that are using digital democracy platforms more and more, but there are also many that don’t have anything yet.”

And these predictions are optimistic across the board.

In the ‘Democracy Technology in Europe’ report published just last week, estimates from companies in the fields of participation, deliberation and online voting tech, the vast majority of whom report a significant increase in demand, see growth from below 200 million Euros in 2022 to 800 million Euros within 5 years.

It’s not just investments and market growth either. Seeing which way the wind is blowing, larger companies outside or adjacent to the DemTech market are looking to acquire.

One of the most notable acquisitions in recent years was Granicus’ acquisition of Australian startup, and top rated DemTech platform, ‘Bang the Table’ in 2021. Granicus has an annual turnover of over 100 million USD. Bang the Table was working with over 1000 cities internationally.

The big players in GovTech and CivicTech, it would seem, are on a bit of a shopping trip.

Growing activity in participatory democracy and online voting

But you don’t just have to take the leaders of DemTech companies’ word on it.

A big reason for the heightened interest is the simple fact that participatory and deliberative democracy are taking off, and they’re difficult to scale without technology.

Whether it’s citizen assemblies in Ireland, climate conventions in France, government petitioning in Estonia, or deliberative experiments in Germany, the OECD reports that there were 289 cases of innovative citizen participation across 59 countries between 2017 and 2020, with an average of 72 cases per year. This is an increase from an average of 41 cases per year between 2010 and 2016.

Meanwhile, a report from Wintergreen Research estimates that the global market for app-based voting will increase from 6 million USD in 2020 to more than 8 billion USD by 2026.

And it’s only set to increase further, with greater support from all directions.

Leading theorists in political reform advocate for participatory and deliberative democracy as a way to reform both political parties and political systems in general, by bringing people back into the fold in a meaningful way.

But DemTech isn’t just about new kinds of democracy. It’s also about streamlining established forms.

Dominion Voting Systems, the company which recently settled a defamation lawsuit against Fox News, had 16.5 million USD in government contracts in 2010. Between 2017 and 2019 that figure rose to 118.3 million USD.

The challenges in ensuring that democracy is accessible, secure and functional, in an increasingly complex environment, mean there’s plenty of space for DemTech companies to grow.

Conspiracy theories notwithstanding.

Government funding — especially in US market

What’s more, participatory budgeting and other forms of participatory democracy are seen as being likely to get a huge boost both directly, through increased government funding, as well as indirectly, through allocations towards climate and sustainability projects and urban development.

In the United States for example, three new spending bills — the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, and the Inflation Reduction Act — include billions in new allocations, not least of which is tens of millions to cities and municipalities that are currently unallocated to specific projects, opening the door for not only a boost to existing participatory budgets but a boom in new ones across the country.

These huge increases in funding for community and citizen-led projects will undoubtedly affect the development and uptake of open-source projects as well.

Public demand

In general, democracy is seen as taking a bit of a downturn. There is a precipitous rise in authoritarianism and previously sound democratic institutions are being eroded internationally.

A recently published report from the V-Dem Institute claims that “advances in global levels of democracy over the last 35 years have been wiped out.”

While that may be a grim assessment, it also means the demand for innovative forms of democracy and democracy technology are at all time high. A downturn in democracy doesn’t mean it’s losing support. It means it needs reform. 

According to Pew Research, a median of 66% of people across 38 countries polled believed that more direct forms of democracy and public involvement in politics was necessary. 

Democracy isn’t dead. It’s due for a comeback and the DemTech market is a critical part of that.

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