Autonomous sourcing platform
At a time when most French companies are still putting in place heavy and tedious calls for tenders when it comes to putting suppliers in competition, their American counterparts are switching to the automation of these same processes, including for "small" purchases. Based in Boston and founded in 2017, Fairmarkit is positioned as the leading platform among the players in this new market.
The company specialises in "long tail" purchasing: the 80% of suppliers representing 20% of purchases, poorly taken into account by existing procurement tools. Fairmarkit thus automatically transforms requests for products or services, the amount of which does not justify negotiation work by the purchasing department, into mini invitations to tender with the company's suppliers.
The platform also extends the search to other types of sourcing such as Amazon B2B for example, in order to find the best price proposals without cutting corners on quality. The average saving observed is in the order of 8 to 15% compared to discounts already negotiated previously by purchasing groups.
Tarek Alaruri, COO, and Kevin Frechette, CEO, founded Fairmarkit after realizing that companies had no real way to compare prices when purchasing supplies, equipment or software. Many turn to the same provider consistently for convenience, rather than spending time looking for other options.
"Beyond lowering some bills, we allow them to stay focused on the real negotiations. A category has been identified which has not been exploited until now and which corresponds to a real need on the part of companies. "says Tarek Alaruri.
Each year, the Boston Metro (MBTA) places approximately 15,000 orders worth less than $50,000 each. Under in-house rules, the organization must collect at least two bids from competing suppliers before finalizing a purchase - for products such as aerosol paint or mechanical parts. MBTA was one of Fairmarkit's first customers: thanks to the platform, they now save over $100,000 per month.
UPDATE November 2019:
In addition to MBTA, Fairmarkit customers now include Siemens, ServiceNow and Boston University. In total, the company has grown from 2 customers in May 2018 when Newfund invested to 26 customers today.
This dynamic was spotted by Insight Partners, a fund well-known for its BtoB investments such as Shopify, Qualtrics, Docusign and Monday. Newfund doubled down in the round.
UPDATE December 2020:
Fairmarkit has raised a $30M Series B led by GGV Capital and Insight Partners, with continued support from 1984, New Stack Ventures, and Newfund.
The reasons behind our investment in Fairmarkit
(extract from Henri Deshays' post - Dec 2020)
That is why, when we came across Fairmarkit back in 2018, we realized the massive opportunity with the company’s automated sourcing platform.While it was starting with tail spend optimization, we believed in the company’s early vision and saw that Fairmarkit had the potential to disrupt the entire enterprise procurement industry.
The company tackles the inefficiency of tail spend using machine learning for sourcing, vendor identification, and automated quoting to accelerate the bid-to-buy process. The two-way automation solution directly impacts the bottom line by saving money and time, while enabling 100% policy compliance. As more clients sign up for automated sourcing, Fairmarkit aggregates previously disassociated data on suppliers, SKUs, transactions and more, creating intelligence for better purchase decision making.
Newfund investor: Henri Deshays