FSH Technologies, a Philadelphia-based company, announced it has raised a total of $25 million in funding. This capital is intended to replace the traditional model where cities and school districts have spent decades purchasing software through hourly consulting firm contracts with a faster approach.
The investment round includes $20 million, led by Lachy Groom, who previously invested in major software companies such as Figma, Notion, Ramp, and Lattice. Acrew Capital co-led the round. Other firms that invested include Operator Partners, Contrary, and Cooley, as well as several private investors.
Previously, FSH had raised $5 million from a group that included Contrary, Acrew, and General Catalyst. The new funding will allow the company to expand nationwide, planning to move from operating in 4 cities to all 50 states within a year.
Cities, states, and schools spend approximately $160 billion annually on technology, and most of these funds go to two types of companies. Lilly Chen, founder and CEO of FSH, believes that hourly billing hinders efficiency in the public sector. In response, FSH has developed an alternative model.
Chen explained that the company only grows when a city or school district adopts their solution and expands its use, which motivates the creation of a working solution rather than just increasing the bill.
FSH creates software to replace outdated government systems. The core idea is this: if the software works effectively, agencies buy more of it; if it doesn't work, they reject it. This alignment is already reflected in the metrics. Since starting expansion in Q2 2026, FSH's recurring revenue has increased sevenfold, and potential business from about one-third of existing clients has grown by 1340%.
The company aims to achieve $450 million in annual revenue by 2028. The company's successes are also evident in crisis situations: Pittsburgh Public Schools switched to FSH after their previous developer faced a security issue that exposed student information. Similarly, Buffalo replaced an old system that could not handle the load.
In Philadelphia, when a new city tax caught thousands of small businesses off guard, FSH developed a support program in 30 days that helped over 1000 businesses apply in 13 languages. Speed is the priority here, as the government does not need another 18-month consulting project.
Currently, FSH operates in the cities of Buffalo, Denver, Philadelphia, and Pittsburgh. With the new funding, the company will begin operations nationwide, and the product roadmap will also be expanded. In addition to core systems for cities and school districts, FSH will add transportation management, police and EMS scheduling, and case management.
The ultimate goal is to replace a disparate set of outdated tools with a single, default-functioning platform. Most of the $25 million will be directed toward product, sales, and hiring. FSH plans to quadruple its staff, primarily hiring engineers for product development, designers for usability improvements, and specialists for direct work with cities and schools. Investors are betting that the GovTech sector needs founders willing to do the unglamorous work.
