From B2B to B2G: More Than a Matter of Technology

Startups like Perplexity AI, OpenAI, and Mistral AI have rapidly evolved into major global players in the global market, partnering with major tech firms like Amazon and Microsoft to deliver solutions for the industrial and services sectors. At the same time, they have emerged as key players in the public sector—not only for the value their solutions bring to improving citizen services but also for their growing influence in global geopolitics.

Startups are finding new opportunities in technologies such as artificial intelligence (AI) tools to move from the B2B (Business-to-Business) market to B2G (Business-to-Government) in areas such as cybersecurity and digital identity. 

But what makes these companies valuable to the public sector beyond technological innovation? Their experience, their ability to meet regulatory standards, and their entrepreneurial agility.

In this article, we explore these trends from both perspectives —startups and government— and highlight three Spanish projects with high-potential solutions for the public sector.

Inspiring Startups: The Public Sector as a Market Opportunity

The public sector represents a high-growth market for startups that have traditionally operated in the B2B space, particularly in areas such as digital identity, cybersecurity, and service automation.

According to the report "How Citizens Protect Themselves Against Cyber Risks" (ONTSI, 2024), 64.9% of users in Spain have been victims of some form of online fraud. This highlights the urgent need for technological solutions to strengthen the security of personal data in digital environments.

Identity verification is a fundamental requirement for public sector digitization—and a key opportunity for the private sector, which has already been actively developing solutions in this area. Saferlayer is a recently launched project that provides a document protection system with intelligent watermarks to prevent fraud. "We are convinced that in the future, public administrations will be the ones to provide solutions for citizens to share their documents securely with companies, but in the meantime, our tool addresses part of the problem," the company says. 

At this point, however, identifying the problem and sizing the market is not enough; the solution also needs to be "packaged" in a way that allows it to be tested in a pilot project with the public sector to evaluate its functionality and potential in the delivery of public services.

1. Proven Experience Builds Trust

Startups can develop products that are useful to the public sector, but their experience with customers and prior validations will add value—and create greater trust within government when it comes to investing in and purchasing technological innovation. 

NeuralTrust, a startup specializing in cybersecurity applied to generative AI, tells Gobe that it has seen "a lot of concern around the security and traceability of AI models," to which companies like theirs are responding.
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"Companies have made progress in strategies to assess and mitigate risks in generative models. This knowledge is critical for the public sector, where misinformation, privacy, and national security are critical factors," the company emphasizes.

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NeuralTrust provides specific evaluation metrics and experience in scalable and secure deployments, and has developed and tested valuable solutions such as TrustGate to protect LLM (Large Language Models) and TrustTest to evaluate generative AI applications for vulnerabilities, errors, and hallucinations before they impact users.

2. Playing by the Rules—And Winning

Recent European Union regulations on AI (EU AI Act) and the General Data Protection Regulation (GDPR) have established a structured framework to ensure security and transparency in the use of technology. Developing tools that comply with these standards not only fosters trust and security in the public sector, but also opens doors for collaboration in meeting regulatory goals. 

For example, Gataca, a startup specializing in decentralized identity, tells Gobe that one of the difficulties in accessing the public sector is the lack of clear definitions regarding standards and certification processes under the eIDAS (Electronic Identification, Authentication, and Trust Services) regulation. "This delays important decisions by organizations," they say. 

That said, they stress that work on the regulation is progressing and that several initiatives are underway to facilitate its implementation.

Inspiring Government: Startup Agility and Innovation

Adopting new technologies in the public sector is often a slow process—held back by limited digital skills and the comfort of doing things “the way they’ve always been done.” But startups bring exactly what governments need to break this inertia: agility, speed, and a relentless drive to innovate. 

By collaborating with startups, governments can accelerate their digital transformation and improve the efficiency, security, and accessibility of public services. A clear example is digital identity. As Gataca points out:
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"Decentralized identity improves public services by providing faster, more convenient and secure access. This reduces the risk of large-scale theft by eliminating a single point of failure.”

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A more proactive approach by the government, both in terms of connecting with the ecosystem and finding mechanisms to integrate solutions, can encourage the adoption of these new technologies and, as a result, improve services. This is demonstrated by previous experiences, such as the Govtech Labs of the Diputación Foral de Bizkaia and the City of Madrid.

Convergence: Turning Collaboration into Transformation

Building spaces for collaboration and fostering trust between startups and governments is essential to making public-private partnerships a reality. NeuralTrust points out that "institutional networking and collaboration with leading cybersecurity and technology organizations has been key to opening strategic conversations."

The govtech sector is currently experiencing rapid growth, not only in Spain, but also globally, as the demand for innovation in public administration is a global phenomenon. "We see that the tool is gaining significant traction in Latin America," says Saferlayer, for example. Thus, there is great potential for scalability for startups that know how to adapt their solutions to different regulatory and cultural contexts.

The journey from B2B to B2G is more than a market shift—it's a commitment to making a meaningful impact across all levels of the public sector.  Startups that succeed in testing and implementing their solutions in the public sector will not only gain access to a stable and highly valuable market, but will also contribute to improving the quality of life of millions of citizens.

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