Forerunner Ventures led the funding round.
It also included Leadout Capital, Neo and angel investors Marco Zappacosta, founder of Thumbtack; Dan Lewis, founder of Convoy; and Katrina Lake, founder of Stitch Fix.
The move comes amid a broader push in the B2B world to move more of its commerce to the web and as local and state governments push forward on their digital efforts, which received a boost because of the lockdown and remote work demands of the pandemic. Indeed, digital procurement is part of that trend, with other companies stepping up their efforts.
California-based CoProcure, incorporated in 2018, is designed to help government officials with “cooperative contracts” used by federal, state and local agencies, along with national purchasing cooperatives.
Agencies can “piggyback” off those contracts, the company said in announcing its new funding round.
About 300 agencies already use CoProcure, the company said, and the marketplace is growing by more than 35 percent quarter over quarter.
The company’s platform is meant to tackle a longstanding “pain point” in the government procurement world, according to CEO and co-founder Mariel Reed: the lack of a centralized source where government tech buyers can not only find vendors but also access those cooperative contracts covering services that other public agencies need.
“We are unlocking all these contracts that have been locked away in digital or physical filing cabinets,” she told Government Technology, noting that the state and local procurement market stands at some $2 trillion.
Doing so can help public agencies expedite the contracting process, at least according to the vision behind CoProcure. Supplying government with technology and other goods and services is a highly regulated process involving competitive bidding, of course, with public agencies needing from four to 24 months to finalize those deals, Reed said.
But if officials were able to easily locate contracts signed by other public agencies, they could use those models — or even those same vendors — and “expedite” the process, Reed said. The company says it has some 50,000 active cooperative contracts on its platform.
“They can do direct to purchase by using a contract that some other agency has used,” she said. “The catch is that in order to buy that you have to find it.”
Before launching CoProcure, Reed, 33, worked for the city of San Francisco as a senior innovation strategist in the Mayor’s Office of Civic Innovation, a job that provided an education on procurement and its inefficiencies.
“In government, everybody loves to hate procurement,” she said, given all the “administrative layers” and regulations.
That knowledge inspired Reed to work on a new way for procurement — an online alternative that would also appeal to the millennials and other younger professionals now making their way in public agencies, people who were basically born into the digital life.
Not only does that “demographic change” bode well for CoProcure, she said, but the looming distribution of federal infrastructure dollars also looks promising from her point of view.
For now, CoProcure isn’t charging for its services. The main goal is to build an audience of government buyers and vendors.
According to Reed, the industry standard is to charge vendors a fee "each time a new sale is generated using an existing cooperative contract," though she said the company has not yet decided on its own revenue model.
“We aim to be a really big company that doesn’t sell to governments,” she said, with CoProcure remaining the place where vendors and buyers come together, and the platform helping to remove “friction” from the contracting process, which would then lead to a reduction in procurement costs.
As for the new capital, most of it will go toward hiring, she said. The company employs 15 people now.
“We would like to double that in the next year,” Reed said.
Editor's note: This story has been corrected to clarify that CoProcure's business model is not yet decided.
