Part Peace Corps, Part Venture Capital: Code for America's Plan for Public Innovation

Solving Uncle Sam’s tech dilemmas is big business, but if your company wants a government contract, you’ll need to understand the bureaucratic beast—both to secure the deal and deliver on it. It helps if you’ve got public-sector experience, and ideally a few close friends still inside signing the contracts.

That can be major handicap for young companies and entrepreneurs who lack connections but still want to bring game-changing ideas into the civic space. Code For America hopes to change that dynamic by sparking civic startups and giving them a map to navigate the bureaucracy. The group is piloting a business accelerator program (applications close June 1) to help small businesses with big ideas get into public service. The potential payoff is huge. Government information technology spending is estimated to be a $174 billion market in 2014.

“The scrappy entrepreneur who's trying to change something in the world generally doesn't understand how government works,” says Jennifer Pahlka, founder of CFA. “If they want to sell to government they're going to need a lot of help.”

CFA launched in 2009 as what Pahlka calls a "Peace Corps for geeks." It matches up hackers and programmers with government agencies to work on difficult data problems for a year at a time. In the first two classes of fellows, CFA participants built a real-time system for Philadelphia residents to contribute to the city’s strategic plan with their cell phones. In Santa Cruz, California, they’ve helped streamline the process for starting a business. There are other projects in a dozen cities.

Sometimes these projects result in new software products that require someone to manage them indefinitely—a whole new business, or more precisely, what Pahlka calls a “civic startup." "It’s any company that is either going to work with government, or without government, but to change the social landscape through technology," she says.

To cultivate these civic startups and help them compete against behemoth contractors, CFA is taking a page from venture capital accelerator programs like Y Combinator, which help entrepreneurs build their skills and tap into human capital networks to find funding and potential collaborators.

CFA will mix that business development model with the Peace Corps-style fellowships to create a social enterprise aimed at building a 21st-century government. “If you look at the last 15 to 20 years, the biggest changes we've seen in how society works have come from disruptive new businesses,” Pahlka says.

CFA will choose five companies for a four-month training program on how to work with, or within, the public sector; improve their business models; and build connections to tap the expertise of CFA’s tech advisors. With more than 50 applications already submitted, the CFA accelerator plans to take on more than five companies at a time.

The lucky civic-minded geeks chosen will receive $25,000 to grow their business, along with the training and entree to Uncle Sam's IT procurement experts. The hope is to build an enlarged ecosystem of smaller, more nimble startups to keep entrenched IT contractors on their toes, taxpayer money better spent, and democracy better served.