The ongoing pandemic has underscored the critical role of procurement, particularly within specific industries. Fairmarkit, a Boston-based company, is focused on delivering a contemporary, digitally-driven procurement solution for large organizations. The company recently announced the successful completion of a $30 million Series B funding round.

This investment was co-led by GGV Capital and Insight Partners, with participation from existing investors including 1984 VC, NewStack, and NewFund. With this latest funding, the total capital raised by Fairmarkit now reaches $42 million, as stated by the company.

According to Kevin Frechette, co-founder and CEO of Fairmarkit, the company aims to modernize procurement by offering an alternative to established software systems from vendors like Oracle and SAP, which have been in use for many years. He observed a significant opportunity for innovation within this space a few years ago, recognizing the prevalence of these older, traditional systems.

He further explains that these conventional systems typically prioritize tracking substantial purchases exceeding $500,000 or $1 million. Expenditures below these thresholds are often categorized as “tail spend.” “Procurement teams generally concentrate on a company’s largest expenditures, such as those over a million dollars, but purchases below that amount often receive less attention and are overlooked. This ‘tail spend’ still represents 80% of total purchases, 80% of vendors, and 20% of the overall budget,” he explained.

Despite representing billions of dollars in spending, this area has historically lacked effective tracking mechanisms. Recognizing this gap, Frechette and his co-founders developed a solution. Their initial client was the MBTA, Boston’s public transportation authority (an organization that greatly benefits from improved efficiency). Currently, the company serves over 50 customers across diverse sectors.

The platform functions as a marketplace connecting vendors with customers, providing a centralized purchasing system for goods and services priced under $1 million. It integrates a customer’s existing vendor data and combines it with additional information to create a comprehensive database of purchasing insights. Utilizing artificial intelligence, the system identifies customer needs and locates the most competitive pricing for specific orders.

Frechette emphasizes that this approach not only facilitates cost savings – he reports customers have achieved a 10% reduction in purchase costs – but also promotes the inclusion of diverse vendors, including businesses owned by women, minorities, veterans, and local enterprises.

He notes that these smaller deals often bypass standard procurement review processes and are processed without thorough evaluation. Fairmarkit, however, highlights these businesses and provides them with opportunities to compete for contracts. “Because our technology’s foundation is a vendor recommendation engine [...], we can actively invite diverse vendors and ensure they receive equitable consideration,” he stated.

The company began the year with a team of 40 employees and has since added 30 more. Their plan is to double the workforce in the coming year, and Frechette intends to build a team that reflects the diversity championed by the company’s product.

“We are committed to prioritizing this effort. We want to move beyond simply assessing our progress on diversity and inclusion and implement programs to actively support it. This is a matter of great importance to me, as it directly relates to our efforts in assisting diverse vendors,” he said.

Frechette highlights his success in fostering company growth and a strong culture despite the challenges of remote work during the pandemic. He does not anticipate a return to a mandatory office environment in the future.

“We’ve reached a point where requiring employees to be physically present in an office is unnecessary [...], which further accelerates our business by removing geographical limitations. We can operate effectively from anywhere,” he explained.