Vendease, a food procurement startup backed by Y Combinator and operating across six cities in Nigeria, has announced its second round of layoffs in just five months as part of a strategic restructuring initiative aimed at achieving profitability and extending its financial runway. A spokesperson for the company confirmed that this decision aligns with Vendease’s transition towards a more capital-efficient operational model while it seeks to secure an extension of its Series A funding round.
The latest round of layoffs, which commenced today, will impact approximately 120 employees, accounting for 35% of the company’s workforce. This follows a previous layoff in September 2024, which resulted in the termination of 86 employees, or 20% of staff.
“Restructuring takes time and happens in phases,” stated Mohamed Chaudry, Vendease’s Chief Financial Officer. He emphasized that the company is working towards establishing a “lean team” to enhance operational efficiency.
Despite raising a total of $33 million since its inception in 2019, Vendease has faced significant challenges due to macroeconomic factors, including the devaluation of the naira and rising inflation, both of which have substantially increased operational costs. The company has not disclosed the remaining balance of the $33 million raised or how these funds have been allocated.
While Vendease claims to have experienced a remarkable 600% year-on-year revenue growth over the past two years, the actual revenue in dollar terms has likely remained stagnant, which may be hindering the company’s expansion efforts.
In addition to workforce reductions, Vendease is implementing critical strategic changes to enhance its financial sustainability. A significant shift involves transforming its buy-now-pay-later (BNPL) service from a loss leader into a revenue-generating product. Previously, the company absorbed the interest costs associated with long-term loan payments, allowing customers to finance their food purchases for a flat fee. The new model introduces a daily interest system, enabling Vendease to profit from lending while customers incur pro-rata interest charges.
“Vendors were willing to wait four days for goods from Vendease, even with instant-purchase options from other suppliers, because of the access to credit,” Chaudry explained. The revised model aims to capitalize on this demand while simultaneously improving cash flow.
To further bolster its operations, Vendease has also integrated in-house artificial intelligence technology to automate previously manual processes, such as demand forecasting and resource planning. The company asserts that this technological shift is enhancing capital efficiency, although it has not provided specific details regarding cost savings or performance metrics.
Vendease’s investors—including Greenlights Ventures, Partech, Realm Capital Ventures, TLcom Capital, VentureSouq, Hustle Fund, and Hack VC—are reportedly supportive of the company’s strategic pivot, according to Chaudry. He noted that several investors have expressed their commitment to participating in the ongoing Series A extension round, although Vendease has not disclosed the target amount for this funding.
While Chaudry indicated that the extended financial runway and anticipated funding would enable Vendease to reach the necessary milestones for a Series B funding round, he did not specify what those milestones entail. Given the company’s current challenges, achieving profitability and sustained growth in dollar terms will likely be significant obstacles.
Vendease’s restructuring efforts reflect a broader trend among Nigerian startups as they adapt to economic realities, shifting their focus from rapid expansion to prioritizing profitability, operational efficiency, and sustainable business models.
