Vendease, a food procurement startup in Nigeria that received backing from Y Combinator, has recently undergone a second round of layoffs within a span of five months. This restructuring move aims to streamline operations for profitability and ensure a sustainable financial future. Approximately 44% of the workforce, totaling around 120 employees, will be affected by the latest round of layoffs. The company’s CFO mentioned that this shift towards a leaner team is part of a strategy to enhance operational efficiency.
Despite raising $33 million since its establishment in 2019, Vendease has faced challenges due to economic factors like currency devaluation and inflation, resulting in increased operational expenses. While the company reported a 600% growth in revenue year-on-year, the actual revenue in dollar terms may have remained stagnant, potentially impeding further growth.
To enhance financial sustainability, Vendease is altering its buy-now-pay-later (BNPL) offering to generate revenue instead of being a loss leader. By transitioning to a daily interest model, the company aims to capitalize on customer demand for credit while improving cash flow. Additionally, Vendease has integrated AI technology to automate various processes, such as demand forecasting and resource planning, to boost capital efficiency.
Investors of Vendease, including Partech, TLcom Capital, VentureSouq, Hustle Fund, and Hack VC, are supportive of the company’s strategic pivot. The ongoing Series A extension round has garnered commitments from several investors. While the company is optimistic about achieving milestones for a Series B round with the extended financial runway, profitability and sustained growth in dollar terms remain crucial objectives.
Vendease’s restructuring reflects a broader trend among Nigerian startups, emphasizing profitability, efficiency, and sustainable business practices over rapid expansion.