AI startups see opportunity in the public sector

A new company called Groundvue recently emerged out of stealth to use artificial intelligence to gather data from state and local municipal proceedings to help inform policy. Company founders say their platform will tap into $4.6 trillion in annual state and local government spending.  

So what? At a time when public budgets are crunched, this may seem like a counterintuitive move. But as the U.S. response to COVID-19 showed, good public health policy relies hugely on data—and fails when officials don’t have access to it. Recent policy changes, including new work requirements for Medicaid recipients and a federal clawback of pandemic-related funds, and other grant terminations, are putting fresh financial pressure on state and local health departments as well as health systems and clinics. But some new startups see an opportunity within those constraints

“We know that local governments right now are under a lot of strain,” Groundvue cofounder Shannon Arvizu told Second Opinion. “They're asked to do more with less. We think they deserve better tools.”

She says their platform can cut down the time it takes to do work that state and local government workers are already doing. 

Her company is part of a growing cohort of startups that aren’t courting big corporations or large academic medical centers with big budgets. Rather, they’re looking at how they can tap into the collective spending of public health departments, smaller health systems and clinics, and federally qualified health centers.

Reserve Your Spot for Upcoming Webinars!

Public health needs help with the administrative burden and patient health.

The premise of Groundvue is deceptively simple: public meetings hold vital information about how various state and local bodies are addressing major issues that affect the lives of Americans. And while this information is public, it’s hard to analyse and distribute learnings.

For example, legal settlements with the opioid manufacturers Purdue Pharma, Johnson & Johnson, and Walgreens are flooding states with $50 billion in cash that they must use to address opioid addiction and deaths. How they do that is up to them. While groups like the Kaiser Family Foundation and the National Academy for State Health Policy track that spending, it may not provide the in-depth information that local health departments need to develop their own policies. While many states are directing that funding at the state level, nine states have given control of those dollars over to cities, counties, and subdivisions.     

“What sorts of policy actions, what sorts of programs are they designing, and what impact it's having in a real-time sort of way that just wasn't possible before,” says Arvizu.

State and local governments are a bigger market than you think. In its 2026 forecast, eRepublic, a media organization devoted to the public sector IT space, projected that state and local government IT spending will reach $160.2 billion this year, up 4-6 percent from the year prior. Health and human services departments are expected to spend $44.4 billion of the total. 

One of the key drivers of growth? The regulatory changes, explained e. Republic Chief Innovation Officer Joe Morris at the company’s Beyond the Beltway conference in February. With less federal funding, states and local governments are looking to technology and companies that can help them make their operations more efficient and less costly. 

Groundvue’s founders echo this sentiment. They say there’s plenty of paid demand from state governments, cities, and non-profits for their product. 

“We have over 40,000 potential customers in that space, and even if we could just help like 1% of these folks, that puts us in a pretty decent space to have a viable company,” said Arvizu.

Groundvue is already working with three states, though it declined to announce which. The company is being funded with angel investment, and the founders declined to say how much they’ve raised to date. 

Groundvue identified untapped data. Arvizu previously served as a senior advisor to the U.S. Department of Commerce chief data officer. Her other cofounders include former head of transformation at the General Services Administration, Ann Lewis, and former head of AI for the Centers for Disease Control and Prevention, Travis Hoppe.