FSH Technologies Raises $25M to Replace Hourly-Billed Government IT

FSH Technologies, a startup building a single platform to replace outdated government IT systems, raised $25 million in total funding. The round includes a $20 million Series A led by Lachy Groom, an early backer of Figma and Notion, with Acrew Capital co-leading. Operator Partners, Contrary, Cooley and several angels also participated. An earlier $5 million seed round was led by Contrary with Acrew Capital, General Catalyst, Scribble Ventures and Basis Set Ventures.

The company targets the $160 billion state and local government IT market, dominated by two vendor types: consulting firms that bill by the hour and point-solution vendors that get bought by private equity and coast on renewal fees. FSH's platform handles procurement, tax compliance, student data and other functions on a single system. The model is designed to grow only when the software works, the company said.

Pittsburgh Public Schools moved to FSH after a security vulnerability in its previous vendor exposed student data. Buffalo made a similar switch after years on a system that had stopped keeping up. When a Philadelphia tax law change left thousands of small businesses suddenly owing a new city tax, FSH stood up a support program in a single month that reached more than 1,000 businesses in 13 languages, most filing for the first time.