Our investment in Pactum: rethinking the future of contract negotiations

All businesses buy, and all buyers negotiate. Yet as software continues to integrate itself into large swathes of the day-to-day running of businesses across the world, the art of negotiation remains mostly untouched. Popular understanding of negotiation holds that both parties engage in a tense back and forth until something gives and an agreement is struck. And much of the conventional negotiation wisdom is drawn from tense conflict situations (think of the Hollywood version of a “Negotiator”).

But is commercial negotiation really a zero sum game?

For example, can the objectives of a large company with many contracts be reconciled with those of it’s smaller suppliers? These were the questions that Kaspar, Kristjan, Martin and the rest of the team at Pactum set out to explore in 2019. They found that current negotiation practices are filled with inefficiency, uncertainty, and untapped value. Since then, they have been hard at work creating an AI-based platform that addresses these problems, by enabling global companies to automate personalised commercial negotiation at scale.

Today we are delighted to announce our investment in Pactum, a company based between Mountain View and Estonia where it has its engineering and operations roots. Today’s pain points in enterprise contract negotiation are plain to see. For the stretched procurement teams in major corporations, maintaining, updating, and securing thousands of contracts is a virtually impossible task for a human team. On the supplier side, vendors often feel squeezed when negotiating with big companies if they get that chance at all. Fortunately, automated negotiation technologies can help solve these problems for both sides.

Pactum’s automated Negotiation as a Service (NaaS) platform allows these procurement teams to unlock cash flow and untapped value. More generally, its AI optimises for the priorities of both parties, integrating relevant data and objectives ahead of time. As a result, the platform proactively renegotiates contracts considering variables such as input prices or delivery terms, delivering the best outcome for everyone.

We see AI everywhere in business, but current applications tend to focus solely on incremental efficiency gains. Pactum’s approach is different: by focusing its platform on revenue generation rather than simple savings, the firm uses AI to create genuine value.

In just over two years Kaspar, Kristjan, Martin, and the Pactum team have come a long way. Now, with a total of $15M in funding secured, the team is ready to take Negotiation as a Service mainstream. Following partnerships with some of the world’s largest businesses including Walmart, major CPG firms, and industrial distributors, Pactum has its sights set on offering NaaS to large, medium, and even small firms. The company is also working to apply the technology to an ever growing list of negotiation situations within enterprises. Even personal applications such as employment contracts, licensing, and rental agreements could be negotiated in this way. This all points to a future in which negotiation looks a lot more certain, efficient, and equitable for all.

We’re thrilled to join the Pactum journey.

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