While most startups first cooperate with smaller customers from the local market, Pactum chose an opposite tactic and started with partnering with global brands. Walmart and Maersk became their first big customers.
While a number of companies went bankrupt last year because of the coronavirus pandemic, Walmart’s profits were increasing. The reason behind this is the IT-revolution taking place within the company. This was emphasised even in Walmart’s economic results: “Walmart’s omni-channel focus is pushing digital penetration to record levels.”
Pactum is also one of the contributors to the success of the US giant as it makes contract negotiation easy and useful for both the company and the vendors. However, Walmart is not the only huge customer of Pactum. Korjus says that many listed companies in the United States also use Pactum.
Making negotiations more convenient
A survey conducted by KPMG in 2017 revealed that 17-40 percent of the value of vendor deals is lost due to inefficient contract negotiation. In addition, people usually perceive negotiation as an act with a negative image. This is what Pactum wants to change. Their aim is to transform negotiation a positive one.
There are AI solutions in the world that help to look through legal documents, however Korjus says that there is no other AI for negotiations. The AI created by Pactum makes sure to consider the needs and interests of both parties to help them find compromises and reach an agreement. “This value creation is so clear and has begun to spread on its own,” Korjus says. Pactum provides value for both the company and the supplier, reaching also smaller companies that often have been left out, as it has been too difficult for giants like Walmart to keep communicating with all of them.
Thanks to Pactum, a person doesn’t have to look through 10,000 contracts. They just have to enter the parameters once and the AI will start negotiations and reach agreements automatically. All that people need to do, is digitally sign the contracts.
It is also important to note that regardless of its efficiency, Pactum does not take away someone’s work. Instead, it gives the former purchasing and category managers time for more strategic activities.
Plans to become accessible to everyone
Even though Pactum is mostly used by Fortune 500 companies, Korjus says that the company plans to make their AI accessible to every person in the world. There has been great interest in Pactum’s solutions in the field HR for simplifying negotiations between employers and jobseekers. “We hope that one day, everyone will have access to a Pactum app that helps them negotiate,” Korjus says.
There is another Estonian app Avokaado from a similar field, which creates legal documents. Mariana Hagström, the founder and CEO of Avokaado, says that contract negotiations are often time-consuming, expensive and complicated. Technology, however, has a lot of advantages in contract creation and negotiation. First of all, technology can reduce the time spent on these processes by 80 percent. Clients are often located all around the world and technology is very helpful in recognising the necessary nuances for creating a common contract template.
Planning to go public
Pactum was founded only three years ago, but it already holds a special record. Last year, the company raised 11 million dollars from well-known investors as part of their series A funding. It was one of the fastest series A funding stages to ever happen in Estonia – it took place only a year and a half after the company was founded.
Pactum is still a favourite of investors. It is one of the most searched companies on the Invest Estonia website and investors voted it as the most attractive or second-most attractive company for two consecutive years in the Estonian tech podcast Restart.
Pactum receives emails from people who wish to invest in the company every day, which is why its founders have been thinking more seriously about the future. Korjus admits that going public would be far more useful for the company than selling it. As many of Pactum’s clients are listed companies from the US, it would be wise for the company to go public as well.
Roots in Estonia
Even though most of Pactum’s market is in the United States, the company is still very much an Estonian startup. The founders of the company have previously participated in the creation of the e-Estonia solutions. Kaspar Korjus is ex-CEO of e-Residency. Kristjan Korjus is the former AI manager of Starship Technologies, an Estonian startup building delivery robots. Martin Rand is the co-founder and former CEO of VitalFields, a startup that was sold to agriculture corporation Bayer (formerly Monsanto) in 2016.
Kaspar Korjus, who mostly lives with his family in the United States, says that different countries have different benefits. Today, the United States is Pactum’s main place of operation. This is where most of its customers and workers are. However, Korjus is very proud that Estonia has so many talents in technological development, and it is also the location of Pactum’s main technology development centre.
“I keep becoming a bigger fan of Estonia thanks to its skilled software engineers,” Korjus says. “It’s great to know that no matter what your vision is, it will be realised with a high level of quality.” Korjus also emphasises the importance of talents in technology and says that Estonia is a very good place for finding those talents. “Creating something this innovative is only possible with the help of the best people.”
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