Y Combinator-backed Nigerian meals procurement startup Vendease has modified its worker pay construction and is looking for contemporary capital, TechCrunch has discovered.
This is after shedding 44% of its workforce — round 120 workers —final month, marking its second spherical of job cuts in 5 months. In the newest growth, the startup has now changed workers’ conventional salaries with a performance-based pay system, supplemented by an Equity Share Option Plan (ESOP), in accordance with inner paperwork seen by TechCrunch.
The five-year-old startup, which raised $30 million in its Series A spherical led by Partech Africa and TLcom Capital, stated the restructuring was essential to navigate to profitability.
Vendease’s new compensation mannequin features a five-phase wage restoration plan, the paperwork say.
In February, all workers obtained a ₦140,000 (~$90) wage, no matter earlier pay. From March to May, the corporate will elevate workers’ wages to 30% of former ranges in the event that they meet efficiency targets, although it hasn’t specified these targets, the paperwork say.
Compensation will improve to 60% of former salaries from June to August and 90% from September to November, with full wage restoration anticipated by December once more contingent on firm and worker efficiency objectives.
The unpaid parts of the salaries will convert into share choices below the ESOP, with 50% vesting over ten months and the remaining over three years. But workers can solely train these choices at a board-approved truthful market worth, in accordance with the worker settlement.
The firm confirmed the adjustments to worker pay insisting that it’s now at a break even level, even near profitability.
“Vendease has restructured each its enterprise and operations. We’re a software program firm, and we wish to concentrate on facilitating OPEX-heavy operations with know-how quite than dealing with them ourselves,” an organization spokesperson advised TechCrunch.
It says the adjustments are meant to encourage worker productiveness whereas the corporate grows extra financially sustainable. “We solely spend what we earn, which retains us constantly at break-even and centered on profitability,” the spokesperson added.
With barely over 150 workers left, Vendease is betting on inner restructuring, contemporary capital, and AI-driven effectivity to chop prices and maintain operations. As the corporate factors out, this additionally means focusing extra on software-driven development and doubling down on its gross sales and funds options and credit score market whereas steadily phasing out warehousing and logistics operations.
Betting on BNPL to remain afloat
Founded in 2019 by Tunde Kara, Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju, Vendease got down to streamline meals procurement for African eating places and meals companies.
The startup claimed it might remove inefficiencies within the meals provide chain, which price companies billions yearly. By 2022, it had moved 400,000 metric tonnes of meals for over 2,000 clients, it stated, saving them $2 million in procurement prices and reducing wastage-related losses by practically $500,000 in Nigeria, its foremost market.
But the final two years have been brutal for Vendease and lots of Nigerian startups with out FX-denominated income. Since its Series A in September 2022, its income in Nigeria’s naira has tripled, however the foreign money’s sharp depreciation inside the final three years has worn out these beneficial properties in greenback phrases. Inflation has additional elevated operational prices, squeezing profitability for the capital- and people-intensive enterprise.
One of Vendease’s foremost income drivers inside the previous 12 months has been its purchase now, pay later (BNPL) product. Traditional lenders typically keep away from meals companies as a result of their volatility and fragmentation. But Vendease leverages its provide chain information to underwrite loans through its market, which connects monetary establishments with meals companies.
The firm claims a default charge of below 1% during the last two years and has issued over $70 million in credit score as of September 2024.
When CFO Mohamed Chaudry joined in January 2024, he helped determine BNPL as a key path to profitability. However, regardless of some current tweaks, the credit score product alone doesn’t appear to be sufficient to get Vendease there.
His appointment additionally set off the continued restructuring to tighten monetary controls and lengthen its money runway, which, in accordance with sources, might solely final just a few extra months.
As such, the corporate is in talks with present and new traders to boost a bridge spherical, cash it should use to fund know-how development and growth quite than operational bills.
Meanwhile, sources additionally say Vendease has explored a possible sale to different gamers within the HORECA (Hotels, Restaurants, and Catering) and FMCG sectors.
The firm, nevertheless, disputes this and insists it’s the opposite means round. “It’s regular to get approached for M&A, particularly while you’re a fast-growing enterprise working in a novel house like meals. Yes, Vendease has been approached, however the founders are centered on scaling, not promoting anytime quickly,” stated a spokesperson.
