Nigerian food procurement startup Vendease is undergoing a significant restructuring of its compensation system as it grapples with financial challenges and aims for profitability. The company, which is backed by Y Combinator, recently laid off approximately 44% of its workforce, equating to around 120 employees, in January. In response to these pressures, Vendease has transitioned to a performance-based salary structure, complemented by an Equity Share Option Plan (ESOP) for additional compensation.
Documents reveal that Vendease has introduced a structured salary recovery plan. In February, all employees were given a standardized salary of ₦140,000 (around $90), regardless of their prior earnings. In the subsequent months, salaries will be gradually increased: from March to May, employees will receive 30% of their previous salaries; from June to August, this will rise to 60%; and from September to November, they will receive 90%, provided they meet designated performance targets. The company expects to fully restore salaries by December, contingent on both individual performance and the overall performance of the company.
Under the new ESOP, the unpaid portions of employees’ salaries will be converted into share options. These options will vest in two phases: half will vest over a ten-month period, while the remaining half will vest over three years. However, employees will only be able to cash out these options at a fair market value as determined by the company’s board.
In addition to restructuring its compensation, Vendease is implementing cost-cutting measures and shifting its strategic focus. The startup, which raised $30 million in its Series A funding round from Partech Africa and TLcom Capital, is making these adjustments as part of a broader initiative to stabilize its financial standing. A spokesperson for the company confirmed that this restructuring aligns with a transition towards a more software-driven model, moving away from direct management of logistics and warehousing. Vendease claims to have reached a break-even point and is emphasizing financial discipline in its operations.
With approximately 150 employees remaining, Vendease is relying on internal restructuring, AI-driven efficiencies, and new capital to sustain its operations. The company plans to concentrate more on its payments and credit marketplace while gradually phasing out services that are operationally intensive.
Since its inception in 2019, Vendease has established itself as a digital procurement platform catering to African food businesses. The startup has reported moving 400,000 metric tonnes of food for over 2,000 customers, resulting in significant savings on procurement costs. However, like many Nigerian startups that operate in local currency, Vendease has encountered financial obstacles. Although its revenue in naira has tripled since its Series A funding in 2022, the rapid depreciation of the currency has negated these gains when converted to dollar terms. Additionally, inflation has further escalated costs, complicating the path to profitability.
One of Vendease’s crucial financial lifelines has been its buy now, pay later (BNPL) product, which offers short-term credit to restaurants and food businesses. The company has extended over $70 million in credit, boasting a reported default rate of less than 1% over the past two years. The startup’s CFO, Mohamed Chaudry, who joined in January 2024, has been advocating for a stronger focus on the BNPL product as a means to achieve profitability. However, despite adjustments made to the product, these efforts have not yet yielded the desired turnaround.
Currently, Vendease is engaged in discussions with both existing and potential new investors to secure a bridge round of funding. This capital is intended for technology growth and expansion rather than for covering daily operational expenses. As Vendease moves forward with its restructuring and fundraising initiatives, the upcoming months will be pivotal in determining whether its new strategy can foster long-term sustainability.
