Pactum Launches Artificial Intelligence Tool for Commercial Negotiations
Pactum is an AI system that helps companies automatically unlock value from every commercial contract by offering personalized negotiating on a massive scale. In the travel industry, this can help global booking sites make sure contracts with partner vendors are up to date and really getting the best deal for both parties.
Oftentimes, large booking sites have thousands of vendors in every market around the world and they don’t have time to update all of their contracts, which results in money being left on the table due to outdated terms that aren’t the best deal for either party. Pactum allows the booking sites to auto negotiate the contract with the vendor through an easy to use chat-like interface, making sure that the final result is an unbiased win-win for both sides, based off of the most recent success from the relationship.
The Mountain View, California company with engineering and operations in Estonia has raised an initial $1.15 Million in pre-seed funding to augment negotiation and AI capabilities as well as scale the firm’s operations. Pactum has also filed the patent this week related to its technology IP.
Inefficient contracting has been estimated to cause firms to lose between 17% to 40% of the value on a given deal, depending on circumstances, according to research by KPMG. Pactum helps companies to improve every contract they have ever signed by automatically negotiating on a massive scale using augmented artificial intelligence that understands the relationships between contract terms. The process automatically negotiates an optimal outcome for both parties and produces a contract for review and sign off.
To do so, the system first determines the value for each possible trade-off in the contract for the client. Thereafter it uses best-practice negotiation strategies to negotiate with the vendor in a chat interface. Win-win trade-offs are determined with suppliers, with terms including payment time, cancellation terms, pricing, etc. The applications range from supplier negotiations for online marketplaces to enterprise and retail procurement negotiations.
The team behind Pactum includes AI experts who have worked at successful startups and global tech companies, including Skype, Monsanto, e-Residency and Starship. Investors in the company are luminaries from the tech world including Jaan Tallinn, co-founder of Skype and Kazaa, Taavet Hinrikus, co-founder of TransferWise, Ott Kaukver, CTO of Twilio and Sten Tamkivi, GM at Skype and CPO at Topia. All are agreed on Pactum’s mission to develop an AI that strongly aligns with human interests and values, thereby creating technology that supports humanity overall.
According to Pactum's calculations, all the Fortune Global 500 companies together have 12 million supplier contracts that are unmanaged, also known as tail spend, amounting to around $100 million to $500 million dollars per enterprise. Pactum's system helps companies enable growth and bring in initially lost income by conducting thousands of parallel automated negotiations at a time. Pactum converted a process that used to take days, involving back and forth communication and preparation, contracts drafts, updates, and approvals, and signatures, etc. to now take an average of 15 minutes.