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Procurement

Procurated Brings Yelp-Like Reviews to Public Procurement

Online ratings and reviews have gained their place in mainstream consumer life. Now, fueled by $10 million worth of fresh capital, a Washington, D.C.-based startup called Procurated is striving to bring more of that mentality to government procurement.

Launched in 2019 by David Yarkin — the state of Pennsylvania’s former top procurement officer — the company has developed vendor performance management software designed to help officials in government, health care and education find the best suppliers.

The general idea is to have those procurement officials review and rate their suppliers, which in turn creates what amounts to a real-time database that can inform purchase decisions. Suppliers can list for free but pay for upgrades that enable them to provide such information as case studies and white papers to potential customers.


Yarkin said Procurated verifies reviewers, does not manipulate reviews and ratings — for example, by accepting payment from suppliers for better or higher listings — and allows users to link to suppliers. The company, however, does not enable direct purchases via the Procurated website.

“It’s almost a utility for public-sector purchasing,” Yarkin, who is also the Procurated CEO, told Government Technology about the vision for his company.

So far, the company has raised $15 million.

That includes the recent Series A funding round that was led by Greycroft and included Tribeca Venture Partners, TDF Ventures and Limerick Hill LLC, which drove the company’s seed funding round.

“Government and education buyers spend $1.5 trillion annually on goods and services that directly impact citizens’ lives,” said Alan Patricof, co-founder and chairman emeritus of Greycroft, in a statement. “But for too long, they have lacked reliable performance data to help make informed decisions.”

The new capital comes as more investors look favorably upon the general gov tech space — though, as Yarkin told it, Procurated stands out almost as a relatively odd duck amid that investment activity.

“You have to have an incredible amount of understanding and experience about how the market works,” Yarkin said when talking about public agency procurement. “You cannot just be a 20-something in your garage and start coding.”

FOUNDING FRUSTRATIONS

Indeed, the company sprung from his own frustration during his work in procurement.

Not only did he and his colleagues have to make decisions on multimillion contracts with relatively little information about the performance records of suppliers, but the feedback they did get was often “cherry-picked” by the suppliers themselves.

“We were making decisions blind,” he said. “The only option we had was to call references. It’s just crazy.”

Another spark involved the mundane reality of business travel, which so often involves deciding on meals at relatively unknown restaurants or choosing someplace that will please a large and diverse group of people. As ratings-and-review sites such as Yelp and Tripadvisor gained traction, Yarkin and countless other consumers came to rely on the data offered via those online channels.

“I found I was making very good decisions by relying on the wisdom of my peers,” he told Government Technology.

GROWTH AND DATA

Since the company entered live beta in the summer of 2019 with participation from the state of Pennsylvania — Yarkin also worked as a procurement consultant since leaving his state job — Procurated has attracted 34,000 reviews of 10,000 suppliers from some 8,000 verified public-sector employees.

Reviews are only the starting point for the Procurated proposition.

The company aims to use all that data to not only help buyers gauge supplier performance and figure out potential places for improvement, but also to more precisely locate specific types of suppliers.

For instance, that might include suppliers certified as small, minority, women- or veteran-owned businesses — Yarkin said his company’s platform has about 1,000 of those businesses already.

For such reasons, Procurated has won praise from one its earliest users.

According to Curt Topper, secretary for Pennsylvania’s Department of General Services, the state was thinking about building its procurement information-sharing tool before deciding to work with Procurated.

“They had no other customers yet, but we thought it would be worthwhile to pursue a pilot with a solution that could potentially scale beyond Pennsylvania and provide greater value to our constituents,” Topper told Government Technology in a statement. “Now, more than 2,000 suppliers have been reviewed by procurement professionals across the state, including 400 small-, woman- or minority-owned businesses. And as the Procurated community has expanded into many more states, our buyers can learn about suppliers not only from their peers in Pennsylvania, but from those all across the country.”

THE IMPORTANCE OF ‘MOATS’

The company says it manually vets the work email addresses of people who sign up to review suppliers, and that only verified professionals from the government, education, nonprofit and health-care industries gain access.

It’s that manual vetting process — and the company’s refusal to game the system for favored suppliers — that Yarkin said will keep Procurated growing as competitors likely emerge.

After all, business-to-business e-commerce keeps on expanding — already, 13 percent of B2B sales in the U.S. are digital, according to one estimate — and that is certain to attract other upstarts and even legacy players to this area of gov tech. Amazon, for example, is already active in procurement, and it’s a pretty safe bet that the e-commerce giant will fight hard for more such business.

“Whether it’s Amazon or any other player, they pose a potential threat to every startup,” Yarkin said. “However, there are certain things we are doing to create a moat around our business. The work of vetting reviewers is not easy, not if you have integrity.”

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