As much attention as national politics attracts, Americans interact more with their local government than any other layer. Permits, libraries, school lunches, tax programs, shelters, fire departments. Those are the services that shape how people feel about whether their government works for them. But the software running those services is, almost universally, decades old, procured through a process that hasn’t meaningfully changed in a generation, and sold by a handful of legacy vendors who have basically zero incentive to improve.
State and local government IT is a shockingly massive market at $160 billion across 90K local governments. It’s also one of the most inaccessible markets in software given the RFP process is slow, opaque, labor-intensive, and (unsurprisingly) political. As a result, most modern software companies ignore it. Incumbents, meanwhile, can rely on the pain of the procurement process itself to prevent customer churn, reducing their incentive to compete on product quality.
This is the problem FSH Technologies set out to solve with $25 million of new capital. Today, we’re excited to announce our lead investment in FSH’s Seed and their Series A, led by Lachy Groom and Acrew Capital.
Distribution as the Product
While most founders see go-to-market as the thing that happens after you build the product. Lilly Chen, the CEO and founder of FSH, inverted that. FSH has built a unique distribution engine that automatically plugs it into the lifeblood of government software procurement: specialized RFPs. Where an incumbent might respond to a handful of bids each month, FSH has built a proprietary system to track and engage across the entire universe of software procurement happening in cities and counties across the country.
The incumbents in this industry have been lazily riding the moat of painful, friction-filled procurement for decades. FSH focuses on deeply understanding the requirements behind each RFP and turning procurement into a more customized, predictable machine for every customer’s needs.
Software That Doesn’t Rot
Winning the RFP is only half the problem. Local governments have been burned before by vendors who overpromise, ship something brittle, and disappear. FSH’s answer is an architecture built on a high-quality, repeatable foundation while letting flexibility pervade into applications that fit a customer’s needs. FSH helps translate government workflows into autonomous software production. Every product FSH ships lives on the same underlying foundation, which means every client benefits when that foundation improves.
The result is custom government software that can be delivered in weeks rather than years, and maintained without the ballooning services contracts that have defined the category for decades.
The FSH Story
None of this works without Lilly. Lilly is a former AI infrastructure engineer, an advisor to city government, and someone with a genuinely unusual mix of technical depth and civic conviction. This is a deeply personal mission for her, and it shows in how she talks about the agencies FSH serves and the people those agencies serve in turn.
It’s been a pleasure to work with Lilly since the beginning. Former Contrary partner Jason Chen invested in the pre-seed in the earliest days of FSH. What’s more, there’s no truer sign of conviction than when an investor decides a company is too compelling not to join, and that’s exactly what happened with Jason. We hate to lose him on our investment team, but we couldn’t be more excited to keep him in the Contrary family as he joins FSH as COO.
We’re thrilled to continue supporting Lilly, Jason, and the FSH team as they rebuild American confidence in local government, one agency at a time.
To learn more about FSH, see the team's announcement here.
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