Pactum co-founders Kristjan Korjus, Martin Rand and Kaspar Korjus
Why we invested in Pactum
Negotiating is one of the most feared activities in business because people often see it as a win-lose situation—and they don’t want to be on the losing side. That fear is justified because studies suggest most negotiators fail to reach an outcome where both sides extract maximum value for their respective companies.
One negotiation is difficult enough, but companies today have hundreds or thousands of suppliers and vendors to manage. In many cases, the contracts aren’t high-value enough to get any special attention, so they’re ignored. But when you add them all up, you have a massive amount of money tied up in contracts that are outdated and inefficient.
What if AI could automate complex contract negotiations and find an agreement for both parties in as little as 15 minutes? That’s exactly what Pactum does today, and it’s why we’re proud and excited to lead their 20M USD round.
The time is right for autonomous negotiations
We’ve been tracking Pactum’s development since we saw their pitch and demo for the first time more than 2 years ago at Estonia’s Online Startup Demo Day.
During that time, not only has the AI improved, but market conditions have shown why autonomous negotiations can be so valuable. Financial volatility, rising inflation, and supply chain issues are everywhere, so having an AI-powered negotiator on your side is a highly effective way to ensure you as well as the other party are getting the most value out of your contracts and saving money where you can.
Amid peak disruptions over the past year, Maersk and Pactum worked to resolve severe capacity imbalances in the spot trucking market. Pactum’s machine learning stepped in to analyze routes, propose prices to the best truckers and secure capacity. That's why the venture arm of shipping giant Maersk - Maersk Growth - is also joining the investment round.
What makes Pactum special
The idea of automated negotiations sounded a little risky and ruthless to us at first. But as we learned more, we realized what makes Pactum special.
It’s a win-win: Pactum enables an alignment of interests and value creation for each party. Equipping big companies, such as Maersk, with a solution that enables them to do business with smaller companies where manual negotiations would normally be prohibitive leads to a more inclusive process.
Fabulous customer feedback: Hearing customers like Walmart talk about Pactum’s impact on process digitalization and how it enables their team to work in a meaningful, sustainable, and more strategic way really impressed us. These aren’t marginal improvements: this is a clear game changer. They exceeded their supplier negotiation targets by 320% while gaining 1.5% in savings on the spend negotiated. Read more in this HBR article.
Mission-driven team: They’ve experienced the pain of negotiations on their own and seen how cumbersome and ineffective they are. The team has the skills needed to build and bring to market such a novel product that is creating a new category.
The future of negotiations
While Pactum is currently focused on agreements with suppliers, it’s easy to see where this technology could go next. How about using AI to help employers and employees negotiate employment contracts based on their unique requirements?
Welcome to the 3VC family, Pactum!
Eva Arh and Petra Mo
Read more about the round on Bloomberg.