Vendease, the Nigerian food procurement startup backed by Y Combinator, has introduced a performance-based salary structure and is in discussions to secure new funding, sources familiar with the matter confirmed. This move follows a significant workforce reduction, with the company laying off 44% of its employees and approximately 120 staff members in February.
The decision marks Vendease’s second major restructuring in five months as the startup aggressively pursues profitability. Internal documents reveal that the company has replaced fixed salaries with a phased compensation plan, tying earnings to performance and supplementing them with an Equity Share Option Plan (ESOP).
New Performance-Based Salary Model
In a drastic shift from traditional payroll structures, Vendease has introduced a five-phase salary recovery plan:
- February 2025: All employees received a flat salary of ₦140,000 (~$90), regardless of previous earnings.
- March-May: Salaries will be restored to 30% of former pay, contingent on meeting unspecified performance targets.
- June–August: Compensation increases to 60% of previous earnings under similar conditions.
- September–November: Employees can earn up to 90% of their former pay, provided performance goals are met.
- December: Full salary restoration is expected, pending both company and individual performance outcomes.
The unpaid portion of employees’ salaries will be converted into stock options under Vendease’s ESOP plan to cushion the impact. Half of these shares will vest over 10 months, while the remaining 50% will vest over three years. However, employees can only exercise their options at a board-approved fair market value, limiting immediate liquidity.
Why Vendease is Restructuring
Founded in 2019 by Tunde Kara, Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju, Vendease set out to revolutionise food procurement for restaurants and food businesses across Africa. The company quickly gained traction, raising $30 million in a Series A round led by Partech Africa and TLcom Capital.
However, Nigeria’s economic downturn, currency devaluation, and inflationary pressures have squeezed the startup’s profitability. While revenue in naira has tripled since 2022, the currency’s decline has eroded those gains in dollar terms, making capital-intensive operations unsustainable.
Vendease is now doubling down on software-driven solutions, pivoting away from direct involvement in warehousing and logistics. “We’re a software company first. Our focus is on facilitating operations with technology, not managing them ourselves,” a company spokesperson told TechCrunch.
Betting on BNPL to Stay Afloat
One of Vendease’s strongest revenue streams in the past year has been its Buy Now, Pay Later (BNPL) offering. Unlike traditional lenders that shy away from food businesses due to their volatility and fragmented nature, Vendease leverages its deep supply chain knowledge to underwrite loans through its marketplace.
- Over $70 million in credit has been issued to food businesses as of September 2024.
- The company maintains a default rate of less than 1%, positioning BNPL as a crucial pathway to profitability.
Vendease’s CFO, Mohamed Chaudry, who joined in January 2024, identified BNPL as a key growth driver. However, despite its success, credit alone has not been enough to push the company into profitability.
Seeking Fresh Capital and Navigating M&A Interest
With approximately 150 employees remaining, Vendease is actively seeking fresh investment to extend its cash runway and fuel technology expansion. While discussions with new and existing investors are ongoing, sources indicate that the company’s financial reserves may only last a few more months.
Amid the funding search, industry insiders suggest that Vendease has explored potential acquisition deals with players in the HORECA (hotels, restaurants, catering) and FMCG (fast-moving consumer goods) sectors.
The company, however, denies any plans to sell. “It’s natural for a fast-growing business in a unique space like food tech to receive M&A interest. Yes, we’ve been approached, but our focus is on scaling not selling,” a company spokesperson clarified.
What Lies Ahead for Vendease?
Vendease’s future now hinges on how well it executes its leaner business model and secures additional funding. With a shift towards AI-driven efficiency, software-focused growth, and strategic cost-cutting, the startup is betting on a tech-driven path to sustainability.
Yet, with its cash reserves dwindling and operational adjustments still underway, the coming months will be critical in determining whether Vendease can truly break even or if it will become another casualty of Nigeria’s turbulent startup ecosystem.
