California-based Pactum, an AI-based platform that enables global companies to automate personalised commercial negotiations at scale, has raised $11M (approx €9.1M) in its Series A round of funding. With this round, the company has raised a total funding of $15M (approx €12.4M) to date.
With this development, Pactum has also announced the general availability of its flagship automated Negotiation-as-a-Service (NaaS) offering. Pactum has also claimed that it is now the first business to successfully deploy automated AI negotiation systems amongst enterprise vendors.
Investors in this round
The round was led by Atomico, with participation from Metaplanet (Jaan Tallinn); Checkout.com CTO Ott Kaukver; TransferWise Chairman & co-founder Taavet Hinrikus; and Teleport co-founder Sten Tamkivi. In addition, existing investor Project A also invested in this round.
London-based Atomico is an international investment firm that invests in ambitious tech founders at Series A and beyond with a particular focus on Europe, leveraging deep operational experience to supercharge their growth.
Founded in 2006, Atomico has partnered with over 100 ambitious teams – including those at Supercell, Graphcore, Omio, Klarna, Lilium, MessageBird, Gympass, Pipedrive and The Climate Corporation. It currently has $2.7B (approx €2.2B) in assets under management.
With this development, Ben Blume, Partner at Atomico, will join Pactum’s board.
Blume says, “Fortune 500 procurement leaders have told us that negotiated agreements are the backbone of their economic engagement, but that their practices for managing supplier contracts are currently filled with inefficiency, uncertainty, and untapped value. Martin, Kaspar and Kristjan recognised this and, with Pactum, have pioneered a unique approach that makes the negotiating process more supplier-friendly and improves outcomes for both parties.”
Founded in 2019 by Kaspar Korjus, Kristjan Korjus, and Martin Rand, the company is based in Mountain View, California, with engineering and operations in Estonia. Pactum increases the value of vendor or employee contracts by negotiating win-win agreements on a large scale.
It is an AI-based system that uses strategies and tactics to negotiate agreements in a chat-like interface. The platform can hold an unlimited number of parallel sessions to renegotiate all vendor contracts, and in the process, frees up resources for more complex negotiations contributing directly to the bottom line.
Pactum was built by luminaries from Skype, Starship Technologies, and the Government of Estonia’s e-Residency program.
Utilisation of the funds
The raised capital will help Pactum to increase its headcounts and expand its customer base amid the release of its flagship automated ‘Negotiation-as-a-Service’ (NaaS) offering.
The proceeds will also be used to scale up the deployment phase of Pactum’s AI automated negotiation platform in response to significant demand. The company aims to expand its team in order to bring in major organisations, and further develop its technologies for new industries.
As reaching supplier agreements with a computer system becomes more normalised, Pactum says its technology can be easily deployed in other use cases such as employment contracts, licensing, or rental agreements.
In June 2020, the company had raised $3M (approx €2.48M) in its Seed round of funding led by Berlin-based Project A. Besides, DocuSign and other previous investors also participated in that round.
How is it different from its competitors?
According to KPMG, about 17 – 40 per cent of the value of vendor deals is lost due to inefficiencies in the contract negotiation process. This is because companies are balancing hundreds of contracts at any given time, and the negotiation process is very time consuming and laborious. This is where Pactum steps in to make a difference.
Pactum’s platform generates win-win deals for both the enterprise and vendor by prioritising and integrating relevant data and objectives ahead of time. This allows the platform to proactively renegotiate contracts in about 15 minutes, spotting changes in variables such as input prices or delivery terms.
Martin Rand, CEO & co-founder at Pactum, explains, “While other AI companies focus on reducing labour costs, Pactum focuses on adding value to the bottom line. All businesses make purchases, which means that any firm will be able to benefit from our automated Negotiation-as-a-Service (NaaS) offering. Although this technology has so far been limited to the most innovative enterprises, Pactum will open the door to all businesses to benefit from AI’s value generation potential – starting with Fortune 500 companies but by no means ending there.”
Unlike other artificial intelligence (AI) startups, Pactum unlocks cash flow and untapped value rather than generating simple efficiencies. According to a statement, in a single departmental use of a Fortune 500 company, Pactum was able to unlock working capital at a rate of $1.5M per month. The company is already partnered with giants such as Walmart, major CPG firms, and industrial distributors.