• Reported survey data points to process, not demand, as the main barrier: 78% of GovTech-oriented startups rate the volume of public contracts positively.
• 72% cite complex tender documentation, 60% extensive reference requirements and 56% high revenue thresholds as procurement challenges.
• Only 11% find working with public administration more attractive than private clients, while 59% find it less attractive.
• 85% say the length of decision-making is the main challenge once cooperation begins.
• The figures come from one German survey; its sample size and survey date are not stated in the release we reviewed.

Governments say they want startup technology, yet the people building it describe the buying process as a wall. Sifted frames the question in its headline: governments need startups, so why is it so hard to sell to them? The most concrete evidence we could verify comes from Germany, where a survey issued by the German Startup Association and Accenture, in cooperation with the Hertie School, quantifies where deals stall. It is one country's data, and the sample size is not stated, but the pattern is specific enough to be useful to founders weighing a public-sector route.

Demand is not the problem

The Hertie School's summary of the GovTech Startup Monitor 2026 reports that 78% of GovTech-oriented startups rate the volume of public contracts positively, and 71% see public-sector organisations as valuable reference customers. That undercuts the idea that founders avoid government out of disinterest. The appetite is there on both sides. What the same survey reports is a gap between the size of the opportunity and the willingness to pursue it: only 11% find public administration more attractive than private clients, while 59% find it less attractive.

Paperwork and references screen out young companies

Among the procurement challenges reported, 72% of startups name complex tender documentation, 60% extensive reference requirements, 56% high revenue thresholds and 54% a heavy emphasis on price. Each of these favours a company with a long client list and legal staff. Consistent with that, 77% say procurement favours established providers. Among startups that do not apply at all, 43% call the processes overly complicated and 42% say they take too long, which suggests the screening happens before a bid is ever written.

Finding the buyer and waiting for the decision

Beyond the tender itself, the survey points to two operating costs founders must price in. Eight in ten startups struggle to identify the right government contact, and 64% rely mostly on personal networks. Once cooperation starts, 85% name the length of decision-making as the main challenge. For a venture-backed company, a long cycle is a runway problem: revenue that arrives late is expensive to wait for, and a reference win that takes this long may not repay the effort.

What to watch and the verdict

The reform signal is mixed. German Startup Association chairwoman Verena Pausder is quoted as saying that achieving it first requires "significantly more startup-friendly conditions in public procurement," and Hertie School professor Gerhard Hammerschmid says "Progress in implementation has been slow." Our reading: treat government as a slow, reference-driven channel, not a growth shortcut, until outcome-based buying replaces process-based buying. 92% of surveyed startups want that shift; whether buyers deliver it is the thing to track. Note that this rests on one German survey, not a Europe-wide measurement.