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120 More Jobs Lost as Vendease Implements Second Round of Layoffs
Vendease, a Nigerian food procurement startup backed by Y Combinator, is undergoing significant changes to become more profitable. As part of these efforts, the company is implementing its second round of layoffs in just five months. This Vendease Second Round of Layoffs will affect around 120 employees, which is about 35% of its workforce.
This recent cut follows a previous round in September 2024, when 86 employees (20% of the staff) were let go. Mohamed Chaudry, Vendease’s Chief Financial Officer, explained that “restructuring takes time and happens in phases,” and that they are aiming for a “lean team” to boost efficiency.
Founded in 2019, Vendease operates in six Nigerian cities, providing a platform to help restaurants manage their daily operations. The company has raised $72 million since its beginning. However, like many Nigerian startups, it has faced challenges due to economic issues like the devaluation of the naira and rising inflation, which have increased its operating costs.
While Vendease claims its revenue has grown by 600% year-on-year over the past two years, its revenue has likely remained stable in dollar terms, potentially hindering expansion. The company has not revealed exactly how much of the $72 million it has raised remains or how it has been spent.
Beyond reducing staff, Vendease is also making strategic changes to improve its financial position. One major shift involves changing its buy-now-pay-later (BNPL) service from a loss-generating product to one that makes revenue.
Previously, Vendease covered interest costs for long-term loan payments, allowing customers to finance food purchases at a flat fee. Now, they have switched to a daily interest model, allowing Vendease to profit from lending while customers pay interest on a daily basis.
Chaudry noted that vendors were willing to wait for goods from Vendease because of the access to credit. The new BNPL model aims to take advantage of this demand while improving the company’s cash flow.
Additionally, Vendease has introduced in-house AI technology to automate processes like demand forecasting and resource planning. The company believes this will improve capital efficiency, although it has not provided specific details on cost savings or performance improvements.
Vendease’s investors, including Greenlights Ventures and Partech, are reportedly supportive of the company’s new direction. Several investors have committed to participating in the ongoing Series A extension round, but Vendease has not disclosed the target amount.
Chaudry stated that the extended financial runway and new funding would help Vendease reach the necessary milestones for a Series B round, though he did not specify what those milestones are. Profitability and sustained growth in dollar terms will likely be important.
These Layoffs cause more job loss and highlight a broader trend among Nigerian startups that are focusing on profitability, efficiency, and sustainable business models rather than rapid expansion.
Tunde Kara, Vendease’s co-founder and CEO, mentioned that the decision to lay off employees resulted from an extensive evaluation process. He stated that the redundancies created by changes in the company’s operations were not sustainable.
When Vendease started, it operated as a marketplace connecting food businesses with suppliers and manufacturers. Over the past two years, it has integrated credit and payment options into its services.
Vendease believes it can address the challenges that food businesses face in accessing credit by using a credit rating algorithm to assess businesses and extend credit through banking partners. Since its launch, Vendease has extended over $72 million in credit, with most of it in the last 12 months.
Vendease Implements Second Round of Layoffs as part of its broader strategy to tackle challenges in Africa’s fragmented food sector. The company initially aimed to connect suppliers and farms with restaurants and food businesses, ensuring deliveries within 24 hours. Vendease has since built additional infrastructure, including logistics, storage, payments, and inventory management, to control the food supply chain from production to consumption.
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