Y Combinator-backed Nigerian meals procurement startup Vendease has modified its worker pay construction and is searching for recent capital, TechCrunch has realized.
That is after shedding 44% of its workforce — round 120 workers —final month, marking its second round of job cuts in five months. Within the newest growth, the startup has now changed workers’ conventional salaries with a performance-based pay system, supplemented by an Fairness Share Possibility Plan (ESOP), in line with inside paperwork seen by TechCrunch.
The five-year-old startup, which raised $30 million in its Sequence 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 Might, 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 enhance 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. However workers can solely train these choices at a board-approved honest market worth, in line with the worker settlement.
The corporate confirmed the modifications 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 need to concentrate on facilitating OPEX-heavy operations with expertise slightly than dealing with them ourselves,” an organization spokesperson instructed TechCrunch.
It says the modifications 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 targeted on profitability,” the spokesperson added.
With barely over 150 workers left, Vendease is betting on inside restructuring, recent capital, and AI-driven effectivity to chop prices and maintain operations. As the corporate factors out, this additionally means focusing extra on software-driven progress and doubling down on its gross sales and funds options and credit score market whereas progressively phasing out warehousing and logistics operations.
Betting on BNPL to remain afloat
Based 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 eradicate 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 prospects, it stated, saving them $2 million in procurement prices and reducing wastage-related losses by practically $500,000 in Nigeria, its major market.
However the final two years have been brutal for Vendease and plenty of Nigerian startups with out FX-denominated income. Since its Sequence A in September 2022, its income in Nigeria’s naira has tripled, however the forex’s sharp depreciation throughout the final three years has worn out these positive aspects in greenback phrases. Inflation has additional elevated operational prices, squeezing profitability for the capital- and people-intensive enterprise.
One among Vendease’s major income drivers throughout the previous 12 months has been its purchase now, pay later (BNPL) product. Conventional lenders typically keep away from meals companies resulting from their volatility and fragmentation. However Vendease leverages its provide chain information to underwrite loans by way of its market, which connects monetary establishments with meals companies.
The corporate claims a default price of below 1% over the past two years and has issued over $70 million in credit as of September 2024.
When CFO Mohamed Chaudry joined in January 2024, he helped establish BNPL as a key path to profitability. Nonetheless, regardless of some latest tweaks, the credit score product alone doesn’t appear to be sufficient to get Vendease there.
His appointment additionally set off the continuing restructuring to tighten monetary controls and prolong its money runway, which, in line with sources, might solely final a number of extra months.
As such, the corporate is in talks with present and new buyers to lift a bridge spherical, cash it’s going to use to fund expertise progress and growth slightly than operational bills.
In the meantime, sources additionally say Vendease has explored a possible sale to different gamers within the HORECA (Lodges, Eating places, and Catering) and FMCG sectors.
The corporate, nonetheless, disputes this and insists it’s the opposite means round. “It’s regular to get approached for M&A, particularly once you’re a fast-growing enterprise working in a singular house like meals. Sure, Vendease has been approached, however the founders are targeted on scaling, not promoting anytime quickly,” stated a spokesperson.