A Philadelphia company has raised $20 million to test whether local governments will buy software outright rather than rent consultants by the hour — the billing model that underwrites most of the municipal IT industry.

FSH Technologies closed a $20 million Series A led by Lachy Groom, an early backer of Figma, Notion, Ramp and Lattice, and co-led by Acrew Capital. Operator Partners, Contrary, Cooley and angel investors also participated. The round takes total funding to $25 million, following a $5 million seed led by Contrary with Acrew, General Catalyst, Scribble Ventures and Basis Set Ventures. No valuation was disclosed, and the company has not stated a founding year.

What the company does

FSH builds operational software for cities, school districts and state agencies — the permitting, filing, scheduling and case-management systems that governments typically buy as bespoke projects from consultancies or as narrow point solutions. It is run by CEO Lilly Chen, a former Meta AI infrastructure engineer, alongside COO Jason Chen, previously a partner at Contrary, and CTO Rodda John, who led engineering at Ramp.

The pitch is a pricing argument as much as a technical one. Bill-by-the-hour is why consulting can never lead to government efficiency, Chen said in the funding announcement, describing a performance-based model in which the vendor is not paid more for taking longer. The company moved from San Francisco to the Philadelphia area around 2020 and works out of Center City.

The numbers behind the round

FSH currently serves Buffalo, Denver, Philadelphia and Pittsburgh. Its largest disclosed contract is a 10-year, $2 million deal with Pittsburgh Public Schools covering food-service operations that support about 22,000 meals a day. In Philadelphia, a compliance platform built for the Department of Commerce processed filings for more than 1,000 businesses in 12 languages in its first month, 85.2% of them first-time filers.

Company-supplied figures put recurring revenue growth at sevenfold after a second-quarter activation, with a stated target of $450 million in annual revenue by 2028. Those projections come from the company and have not been independently verified. Chen declined to give a revenue figure in July, saying only that it was in the millions.

The money goes to product development, sales and headcount: from 11 employees to more than 45, weighted toward engineering, design and client strategy.

Why the timing matters

Government efficiency has become an unusually live political subject, and the consulting spend that supports public-sector technology is a visible target. FSH is arguing that the problem is procurement structure rather than software quality — a claim that is cheap to make and expensive to prove, since municipal sales cycles are long and incumbent integrators are deeply embedded.

The company says it intends to operate in all 50 states within a year and to add EMS and police scheduling, transit management and case management. That is an aggressive schedule for an 11-person team selling into procurement offices, and it is what the $20 million is meant to buy. Whether fixed-price beats billable hours in this market is still an open question; FSH now has the capital to run the experiment at scale.

Source

Technical.ly — "Philly govtech startup FSH Technologies raises $20M Series A, plans nationwide expansion"