Y Combinator-backed Nigerian food supply startup Vendease has restructured its employee compensation model as part of broader efforts to stay profitable and raise fresh capital.
This move comes just weeks after the company slashed nearly 44% of its workforce—about 120 employees—marking its second layoff in less than six months.
Performance-Based Pay and Equity Shares Replace Salaries
According to internal documents reviewed, Vendease has shifted away from fixed salaries to a performance-based pay system tied to clear targets. The company also introduced an Equity Share Option Plan (ESOP) as part of the new structure.
The five-year-old startup, which previously secured $30 million in a Series A round led by Partech Africa and TLcom Capital, described this restructuring as a necessary step towards profitability.
Vendease’s updated compensation plan includes a five-phase salary recovery roadmap:
- February: Every employee received a flat ₦140,000 (~$90), regardless of their original salary.
- March to May: Staff will earn up to 30% of their former salary if performance targets are met.
- June to August: Wages increase to 60% with continued target achievements.
- September to November: Pay rises to 90% of original salaries.
- December: Full salary restoration, subject to both individual and company performance.
The company did not disclose the specific performance metrics required at each stage. However, unpaid portions of salaries will be converted into share options, vesting 50% over ten months and the remainder over three years. Employees can only exercise these options at a board-approved market value.
Vendease Claims Break-Even, Focuses on Software and AI Efficiency
A company spokesperson confirmed the changes, stating that Vendease is now operating at break-even and pushing closer to profitability.
“Vendease has overhauled its operations and business model,” the spokesperson noted. “We’re pivoting to function as a software-driven company, focusing on leveraging technology to handle operational-heavy tasks instead of managing them directly.”
The startup says this shift is designed to boost productivity and maintain financial discipline. “We’re only spending what we earn, which keeps us consistently at break-even and aligned with our profitability goals,” the spokesperson added.
With around 150 employees left, Vendease is betting on internal restructuring, technology-led efficiency, and new investor backing to navigate a challenging market.
Scaling Back on Logistics, Doubling Down on Payments and Credit Marketplace
As part of its restructuring, Vendease plans to scale back warehousing and logistics operations. Instead, the company will double down on its software products—including its sales, payment solutions, and growing credit marketplace.
The startup is also leaning into AI-driven efficiency tools to cut costs and improve service delivery.
BNPL Gains Traction but Not Enough
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.
By 2022, it had moved over 400,000 metric tonnes of food, serving more than 2,000 customers. The startup claimed to have saved these businesses $2 million in procurement costs and reduced wastage-related losses by nearly $500,000.
However, the last two years have been tough. While Vendease’s naira-based revenue tripled since its Series A, Nigeria’s economic crisis and currency devaluation erased much of that progress in dollar terms. Rising inflation has further increased operational costs, hurting profit margins for a business already reliant on both capital and manpower.
One bright spot has been Vendease’s Buy Now, Pay Later (BNPL) product. In a space where traditional lenders hesitate, Vendease has leveraged its deep supply chain data to underwrite over $70 million in credit as of September 2024. The company boasts a default rate under 1% over two years.
The BNPL model became central to Vendease’s profitability strategy, especially after CFO Mohamed Chaudry came on board in January 2024. However, internal sources suggest that despite its success, BNPL alone isn’t enough to carry the company to profitability.
Running Low on Cash, Vendease Seeks New Investors
To extend its runway, Vendease is actively in talks to raise a bridge round, aiming to fund its technology upgrades and market expansion. The company insists this capital will not cover operational expenses but will instead accelerate growth.
Sources revealed that Vendease had also considered selling to major players in the HORECA (Hotels, Restaurants, and Catering) and FMCG sectors.
However, the company denied being for sale. “It’s normal for fast-growing companies like ours to receive acquisition offers,” a spokesperson clarified. “While we’ve been approached, our focus remains on scaling—not selling.”
