Y Combinator-Backed Nigerian Food Procurement Startup Vendease Has Changed Its Employee Pay Structure and is seeking fresh capital, techcrunch has Learned.
This is after laying off 44% of its workforce – Around 120 Employees – Last Month, Marking Its Second round of job cuts in five monthsIn the latest development, the startup has replaced employees’ traditional salaries with a performance-based pay system, supplemented by an Equity Share Option Plan (Esop), Acrocarding to Innernal Documents Seen by Techcrunch.
The five-yar-old startup, which Raised $ 30 million in its series a round LED by Partech Africa and Tlom Capital, said the restructuring was Necessary to Navigate to Profitability.
Vendease’s New Compensation Model Includes a Five-Phase Salary Recovery Plan, The Documents Say.
In February, All Employees received a ₦ 140,000 (~ $ 90) Salary, Regardless of Previous Pay. From March to May, The Company will raise employees’ wages to 30% of forr levels if they meet performance targets, thought it has specified these targets, the documents say.
Compensation will increase to 60% of forr Salaries from June to August and 90% from September to November, with full Salary Restoration Expected by Deeain Contining Goals.
The unpaid portions of the salarys will convert into share options under the esop, with 50% vesting over ten months and the rest over three years. But employees can only exercise these options at a Board-Papproved Fair Market Value, According to the Employee Agreement.
The company confirmed the changes to employee pay insisting that it is now at a break even point, even close to profitability.
“Vendease has restructured bot its business and operations. Company spokesperson told techcrunch.
It says the changes are intended to encourage employee productivity while the company Grows more Financially Sustainable. “We only spend what we earn, which keeps us consistently at break-even and focused on Profitability,” the spokesperson added.
With Slightly Over 150 Employees Left, Vendease is Betting on Internal Restructuring, Fresh Capital, and AI-Driven Efficiency to Cut Costs and Sustain Operations. As the company points out, this also means focusing more on software-Driven Growth and Doubling Down on its sales and payments solutions and credit marketplace While GESING OUT PHASING OUT PHASING OUT WARHASING OUT Logistics operations.
Betting on bnpl to stay afloat
Founded in 2019 by tunde kara, olumide fayankin, gatumi aliyu, and wale oyepeju, vendease set out to streamline food procurement for African restaurants and food businesses.
The Startup Claimed it could eliminate intelligence in the food supply chain, which cost businesses bills annually. By 2022, it had Moved 400,000 Metric Tonnes of Food for Over 2,000 customersIt said, saving them $ 2 million in procurement costs and cutting waste-related losses by Nearly $ 500,000 in Nigeria, its main market.
But the last two years have been brutal for vendease and many nigerian startups without fx-denominated revenue. Since Its Series A in September 2022, its Revenue in Nigeria’s Naira has tripled, but the currency’s sharp depreciation with the last three year has wiped out Inflation has further Increased Operational Costs, Squeezing Profitability for the Capital- And People-IntenseVe Business.
One of vendease’s main revealed drivers within the past year has been it’s live, pay later (BNPL) product. Traditional lenders often avoid food businesses due to their valati and fragmentation. But vendease leverages its supply chain knowledge to underwrite loans via its marketplace, which connects financial institutions with food businesses.
The company claims a default rate of under 1% over the last two years and has Issued Over $ 70 Million in Credit As of September 2024.
When cfo mohamed chaudry joined in January 2024, He Helped Identify Bnpl as a Key Path to Profitability. However, despite some recent tweaks, the creed product alone does not see to see to be enough to get vendease there.
His appointment also set off the Ongoing Restructuring to Tighten Financial Controls and Extend Its Cash Runway, Which, According to Sources, May only Last A Few more months.
As such, the company is in talks with existing and new investors to raise a bridge round, money it will use to fund technology growth and ex -exansion rather than openers.
Meanwhile, sources also say vendease have explred a potential sala to other players in the Horeca (Hotels, Restaurant, and Catering) and FMCG Sectors.
The company, however, disputes this and insists it’s the other way. “It’s normal to get approached for m & a, especially when you’re a fast-going business operating in a unique space like food. Scaling, Not Selling Anytime Soon, “said a spekesperson.