Contract negotiation, automated: why we invested in Pactum
We are super excited to back the incredible Pactum team alongside DocuSign in their journey to fundamentally change how businesses negotiate long tail vendor contracts.
Welcome to the Project A family!
The long tail black box: leaving sizeable margins unrealised
Take the largest retailers, OEMs, licensing companies in the world — all of them have tens of thousands of vendors. The long tail of vendors makes up about 80 to 90% of total SKUs while representing 10% to 20% of spending, according to McKinsey. Of course, the amount of people an organisation can employ to do account management is finite. The consequence is that thousands of vendors, in turn with thousands of vendor contracts, are left completely under managed — a KPMG study recently estimated that 17% to 40% of a contract’s value is currently latent.
In comes Pactum
Pactum helps companies unlock value from their long tail by automatically negotiating contracts on a massive scale. How you ask? By working closely with enterprise customers, Pactum firstly identifies the parameters of long tail deals based on which re-negotiation can unlock value. The rest of the work is done entirely automatically: vendors are prompted to use the automatic negotiator and are able to sign a newly negotiated contract right there and then. Pactum creates a win-win not just for the enterprises but also allows vendors to have a say in re-negotiating their contracts.
Why would vendors want to do that? Well, a mind-boggling 82% currently prefer Pactum to human negotiations. Firstly, their tool is meant to remove the bias, leaving vendors more at peace that there is no hidden agenda. Second, speed: needless to say that computers are faster responders. There is colossal value to be generated when thousands of negotiations can happen simultaneously.
Pactum’s innovative proposition hasn’t gone unnoticed, they can count the largest public corporation by revenue in the world, Walmart, as their client. But Pactum’s value proposition goes well beyond retail. Any enterprise managing a long tail of commercial relationships, be it in manufacturing, licensing, software, or service can benefit from its smart negotiation.
The agility, ambition, and expertise of the team have truly blown us away, to say the least.
We look forward to working with Kaspar, Martin, and Kristjan and the rest of the team in changing the future of negotiation!
