CityGrows 2021 Status and Next Steps

CityGrows is a remote-first team committed to transparency and efficiency. We built this overview to give you a sense of how we work, as well as what we're doing. To get access to a more detailed metrics deck and our data room please book a meeting with our CEO.

Highlights

  • No-code permitting and licensing software for governments. We're changing how governments buy and use technology
  • 380% MRR Growth in last year
  • 10K local governments are prime targets for growth today.
  • Marketing-driven customer flywheel is spinning faster
  • Profitability in 2022 / $1M ARR in 2023
  • Raising $350K+

What is CityGrows?

CityGrows is no-code permitting and licensing software for local government, built by a small and enthusiastic team of government technology experts. Governments choose CityGrows because it's cost-effective, fast to set up, increases self-sufficiency, and streamlines permitting. 

CityGrows process overview screenshot
Read about how CityGrows helped LA respond in real time to its permitting challenges

CityGrows launched with our first public workflow for the City of Santa Monica in 2016 and is now in use by municipalities, counties, and special districts in 9 states. Unlike most government technology companies, CityGrows is flexible enough to serve the entire local government market. Our largest customer is the City of Los Angeles; because we’re a self-service product we’re also used by small- and medium-sized governments.

Why it matters

In the U.S. alone there are 40K municipalities and another 50K special districts. These local governments spend $50BN annually on technology yet here is no dominant market leader in the permitting space. Incumbent technology providers have neglected to improve their products, leaving permit applicants frustrated, government employees wrangling obsolete technology, and managers lacking basic performance management metrics. States spend another $50BN and face even greater technology challenges.

We've heard from payment processors that 30%+ of government fee payments are still happening primarily offline. Self-hosted government systems are vulnerable to ransomware and other security risks, and small and medium-sized governments lack the internal technical capacity to move to cloud-based services without an intermediary like CityGrows.

In Sludge, Cass Sunstein estimates that 11 billion hours a year are spent on government paperwork by citizens. Delays in permitting and licensing are negatively impacting economic growth and important issues. We have to do better.

As we saw during the last two years, the lack of modern technology made it extremely challenging for governments at all levels to respond nimbly to COVID-related challenges. Governments that used CityGrows were able to transition smoothly to remote work and were able to respond in real time to changing conditions.

Without streamlining permitting it’s impossible to meet community and economic goals around:

  • Business formation and job growth
  • Housing
  • Solar implementations
  • Stormwater management
Map of CityGrows state expansion
Expanding into high value/ high volume states

Traction:

In the last year we’ve seen growth and evidence that our marketing-driven acquisition model is working. 

  • We’ve expanded to new states (TX/ NY/ CO) and types of governments (water and fire agencies), all through inbound inquiries.
  • We’ve seen a 7x increase in self-booked demos in last six months, our highest-performing acquisition channel.
  • We’ve found new, lower-cost lead gen strategies that are producing quality prospects.
  • Our pipeline has more than doubled ($1M value), while we’re being more disciplined about qualifying and closing out unlikely deals faster.
  • Our referral networks and partnerships are ramping up.

Please connect with our CEO for access to our data room and growth metrics.


Product

CityGrows is a multi-tenant platform governments use to digitize their business processes. We’ve created a product that supports the complexity and customization required by governments, while prioritizing ease of use. Non-technical staff configure and manage permits licenses and processes with minimal training and support.

CityGrows takes inspiration from modern software companies that create a layer of technology that radically simplifies key business processes and applies those lessons to government.  Some of our inspirations are:

  • Github: CityGrows allows governments to copy and then customize permits and licenses from our template library or from other governments, similar to how Github facilitates the forking of open source code snippets. As we grow the network effect becomes more powerful.
  • Heroku: CityGrows acts as a smart technology layer that allows small teams to build complex workflows without worrying about the underlying technical requirements. 
  • Stripe: One of our earliest insights was that integrating payment processing capabilities into workflows helps governments improve compliance and increase revenue. Adding a processing fee to those payments means that our interests and our government customers’ interests are aligned.
  • Slack: Network effects within and between governments and a growth strategy based on an end-run around traditional enterprise sales.

CityGrows is built with Rails/ React/ Postgres database and runs on Heroku/ AWS.

Governments use CityGrows to manage a wide range of business processes. The most common uses are:

  • Business licensing
  • Building permits
  • Internal workflows

Business model

Chart of dollars processed by month

The CityGrows business model is based on our understanding of government technology purchasing and implementation, and designed for fast customer acquisition. Our recent customers have gone from finding CityGrows to demo to implementation in 2-4 weeks (compared to months or years-long sales cycles for our competitors). 

CityGrows has two revenue streams:

  1. Subscriptions: Governments pay a monthly or annual subscription rate. There are no limits on admin users or number of workflows per subscription.
  2. Payment processing fee: CityGrows assesses a transaction fee on each permit or license payment processed on the CityGrows platform. This fee is passed on my governments to their permit applicants. As governments add more types of workflows to CityGrows revenue within each customer grows over time.

Unit Economics

Because our subscriptions are priced to stay below governments’ RFP limits (and therefore support a fast sales cycle), it’s essential that we’re able to acquire and onboard customers in a cost-effective and scalable way.

Over the last six months we’ve seen increasing efficiency of paid and organic lead generation, and we’ve been able to refine our low-touch sales and onboarding processes. With continuous improvement of our product, as well as the growth in subscriber revenue over time for each customer, we’re excited about the fundamentals of our growth strategy.

Why and what we’re raising

Chart of revenue projections by year


Because we knew that building a successful SaaS product that could displace the legacy tech that’s hobbling governments would take time we’ve prioritized being capital-efficient.

Our financial projections are based on data from our last 2 quarters of growth, and we’re ready to take on more funding and continue resourcing our expansion.

We’re still raising conservatively ($350K+) relative to the sophistication of our product and our potential, because we believe that maximizes the upside for our early investors and limits the downside risk we’ve seen for others in our sector who’ve taken too much investment too quickly because of a lack of understanding of market dynamics. Please contact our CEO to get access to our data room and detailed projections.

Use of funds 

  • Grow our outreach to the 10K governments who are prime targets for expansion
  • Resourcing at higher levels the marketing activities that we’ve seen work - and continue testing and optimizing. Additional consultant support, ad spend, and content production.
  • Add product features and dev capacity to support expanding our prime target universe

Who’s already on board

We’re proud to have investment from leaders in government and SaaS operators. Our major institutional investment to date came from the Calm Company Fund.

CityGrows investor list