Venture Capital: Pactum, A Provider Of Negotiation-As-A-Service (NaaS), Raises $11M

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Pactum boasts of Walmart as one of its clients.

Pactum, a startup with Estonian origins that is now headquartered in California, operates an AI platform designed to automate contract negotiations for big companies such as Walmart (NYSE: WMT). It announced Tuesday its raise of $11 million (approx €9.1 million) in its Series A round of funding. (Silicon Canals)

With this round, the company’s aggregate funding stands at $15M (approx €12.4M) to date.

Atomico led the round. Metaplanet (Jaan Tallinn); Checkout.com CTO Ott Kaukver; TransferWise Chairman & co-founder Taavet Hinrikus; and Teleport co-founder Sten Tamkivi also participated in the funding. Project A, a repeat investor, also chipped in.

Pactum’s AI-based negotiation-as-a-service

Pactum typically automates negotiations on “long-tail” vendor contracts that are not large enough to merit the involvement of a senior negotiator. Collectively, however, these contracts constitute a large chunk of the organization’s expenses.

Pactum usually aims to serve companies with a minimum of $1 billion in revenues. These are likely to have as much as 80% of their commercial agreements in tail spend contracts.

Per nanalyze.com, Pactum’s NaaS generates savings of 2% to 11% per $100 million of tails.

According to Fortune, Pactum’s charges are as follows:

  • $25,000 for a proof of concept
  • Software deployment (Option 1): $120,000 annually for a three-year contract plus 25% of the first-year gains seen from using the system, with the annual license fee deducted from that cut
  • Software deployment (Option 2): $120,000 for an annual license and then a fee of $600 to $6,500 per successful negotiation

System building

“When we work with our customers, we go through a discovery process lasting several weeks,” Pactum cofounder and CTO Kristjan Korjus told VentureBeat. “During that time, we have identified up to 30 items to negotiate about in just one use case alone. Each of these items can be exchanged for value for both sides. Examples include freight, warehousing, contract length, contract cancelation terms, growth rebates, and so on.”

Once the system is set up and trained on the company’s negotiation priorities, it can talk to suppliers through a chatbot and conclude contracts autonomously.

According to Pactum, this is an optimal solution to arrive at a Pareto optimal outcome – a situation where either party can be better off without making the other party worse off.

Related Story:   Pactum’s AI Negotiates Contracts For Walmart                                                 

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