Vendease, a Y Combinator-backed food procurement startup in Nigeria, has laid off 120 employees (44% of staff) in its second round of job cuts within five months. This move is part of a broader strategy to achieve profitability and extend its financial runway while seeking to close a Series A extension round.
Why the Layoffs?
- The first layoff in September 2024 affected 68 employees (20% of staff).
- Macroeconomic challenges, including naira devaluation and rising inflation, have significantly increased operational costs.
- The company is transitioning to a leaner and more capital-efficient business model.
“Restructuring takes time and happens in phases,” said Mohamed Chaudry, Vendease’s CFO.
Strategic Shifts for Financial Stability
- Repurposing BNPL (Buy-Now-Pay-Later) Model
- Previously, Vendease absorbed interest costs on loans.
- Now, it has shifted to a daily interest model, generating revenue from lending.
- Vendors prefer Vendease for its credit offering, even with other instant-purchase options available.
- AI-Powered Automation
- The company has deployed AI-driven demand forecasting and resource planning to cut costs and improve efficiency.
- However, specific cost savings or performance metrics remain undisclosed.
- Fundraising & Investor Confidence
- Vendease has raised $33 million since 2019 but hasn’t disclosed how much remains.
- Investors, including Partech, TLcom Capital, Hustle Fund, and Hack VC, are supporting the pivot.
- Several investors have committed to its Series A extension round, though target raise figures are undisclosed.
Challenges & Outlook
- Despite claiming 600% YoY revenue growth, Vendease’s dollar revenue may be flat due to currency devaluation.
- Profitability and sustained dollar-term growth will be key hurdles before a potential Series B round.
Vendease’s restructuring reflects a broader trend among Nigerian startups—shifting focus from hyper-growth to profitability and operational efficiency amid economic uncertainties.