Understanding the supply chain — from reducing friction to adding visibility throughout the process — is core to our focus at Construct. It all begins with the cumbersome and complex procurement process. The ultimate barometer of success for a large company to manage its supply is cost savings, or — better yet — cost avoidance. This power concentrates in Fortune 500 companies’ procurement departments that manage multiple trillions of dollars of spend annually with woefully inadequate tools. Procurement departments supposedly rely on their ERP systems for order management and pricing, but in reality the only levers they have to lower prices are blanket policies and procedures and, well, time (and lots of time is spent today working through procurement processes!). The team at Arkestro is making the procurement pricing function a differentiating lever for these companies and creating a market called Predictive Procurement Orchestration in the process. When we heard overwhelmingly positive feedback from their customers — with proven results — we jumped at the opportunity to work with them. Today, we’re excited to announce we co-led their $26M Series A round alongside our friends at NEA, Koch Disruptive Technologies, and Four More Capital.
Arkestro leverages historical data, current RFP parameters, and external market data to drive its real time recommendation engine that offers hyperdynamic, optimized pricing for procurement teams allowing them to better negotiate and manage 100% of their procurement spend. RFP cycles that typically take months are shortened to weeks using the Arkestro platform, which is more important than ever given current delays and disruptions. The integration is seamless and the savings are far from incremental. In the case of one multinational pharmaceutical company, Arkestro recently saved them $4.2M on a $19.5M direct spend for biomaterials, one of the most critical and consistent purchases they make. In the case of chemical company BASF, for example, in addition to saving the company 15% of cost on a recent fastener contract, using Arkestro drove the cycle time down from 6+ months to less than 2 weeks. They accomplished this by ingesting and balancing hundreds of different decision making parameters to inform cost and optimal spend decisions.
Just as Salesforce.com grew into a ~$165B company offering CRM tools for the “sell-side” we believe Arkestro has the same opportunity on the “buy side.” Few are better equipped to build this category than the Arkestro team. Edmund Zagorin, CEO and co-founder, spent years as a data scientist focused on procurement working with clients to apply the latest tech advancements to identify savings, and co-founder Rob DeSantis was the co-founder and EVP of Sales at Ariba where he oversaw sales growth at the company from $0 to $250M in revenue. They’ve built a team combining leading data scientists and machine learning engineers with business and product leaders with decades of experience as top performers at Ariba, Salesforce, and Coupa.