theses

3x Thesis: The Municipal Services Modernisation Play

Lee McCabe

24 Nov 2025 — 1 min read

Most local governments still run on software that looks like it came free with Windows XP.

Procurement, permits, inspections, citizen support portals......held together by outdated code, clunky interfaces, and people who've been "restarting the server" since 2004.

Yet these systems handle billions in transactions and touch nearly every citizen. That's the absurdity. And the opportunity.

Tyler Technologies quietly built a $20B market cap doing exactly this. They understood what most missed: government contracts are slow to win but almost impossible to lose. Average municipal software contracts run 7-10 years with 95%+ renewal rates. And they trade at 6-8x revenue while traditional SaaS fights for 3-4x.

GovTech has become one of the stickiest recurring revenue plays in software. But it's still incredibly fragmented. Hundreds of small vendors own a single niche......permit management here, inspection scheduling there, a licensing system somewhere else. None of them talk to each other. None of them look like they were designed after Y2K.

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AI isn’t coming for middle management. It’s already rearranging the job description.

The layer of people whose primary function is aggregating information, writing summaries, building decks, and “managing up” is about to feel the shift first. Not because AI is more insightful than they are, but because it’s cheaper, faster, and doesn’t need three pre-meetings to prepare for the meeting.

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News (w/e 1/9/26)

Deals (w/e 1/9/26)

Private equity has quietly entered a new sport: competitive talent hoarding.

AI isn’t coming for middle management. It’s already rearranging the job description.