Vendease, a Y Combinator-backed food procurement startup operating in six Nigerian cities, has implemented its second round of layoffs in five months as part of a restructuring effort to achieve profitability and extend its financial runway. A company spokesperson confirmed the layoffs to TechCabal, saying the move aligns with the startup’s shift toward a more capital-efficient model while it seeks to close a Series A extension round.
The latest layoffs, which begin today, will affect about 120 employees (35% of staff). This follows a previous round in September 2024, which impacted 86 employees (20% of staff).
“Restructuring takes time and happens in phases,” Mohamed Chaudry, Vendease’s Chief Financial Officer, told TechCabal. He said the company is moving toward a “lean team” to improve operational efficiency.
Despite raising $72 million since its founding in 2019, Vendease has struggled with macroeconomic headwinds, including naira devaluation and rising inflation, which have significantly increased operational costs. The company did not disclose how much of the $72 million remains or how it has been allocated.
While the company claims revenue has grown 600% year-on-year over the past two years, revenues have likely remained flat in dollar terms, possibly hindering expansion.
Beyond staff reductions, Vendease is making key strategic shifts to improve financial sustainability. A major change involves repurposing its buy-now-pay-later (BNPL) offering from a loss leader to a revenue-generating product. Previously, the company absorbed interest costs for long-term loan payments, allowing customers to finance food purchases at a flat fee. Now, it has switched to a daily interest model, enabling Vendease to profit from lending while customers pay pro-rata interest.
Like many Nigerian startups, Vendease—which has raised $72 million since its founding— is grappling with naira devaluation and rising inflation, which have increased operational costs across its supply chain. Despite growing revenue by 600% year-on-year in the past two years, the company’s growth remains stunted in dollar terms. The company declined to share any specific revenue numbers.
Beyond layoffs, these pressures have also forced the company to reassess its business model. A major change involves the repurposing of its buy-now-pay-later (BNPL) product from a loss leader to a revenue-generating product. Previously, the company absorbed interest costs for long-term loan payments, allowing customers to finance food purchases at a flat fee. Now, it has switched to a daily interest model, enabling Vendease to profit from lending while customers pay pro-rata interest.
“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 new model aims to monetize this demand while improving cash flow.
In addition to restructuring, Vendease has introduced in-house AI technology to automate previously manual processes, such as demand forecasting and resource planning. The company claims this shift is improving capital efficiency, though it has not disclosed specific cost savings or performance metrics.
Vendease’s investors—including Greenlights Ventures, Partech, Realm Capital Ventures, TLcom Capital, VentureSouq, Hustle Fund, and Hack VC—are supportive of the company’s pivot, according to Chaudry. He added that several investors have committed to participating in the ongoing Series A extension round, though Vendease declined to disclose the target raise.
While Chaudry stated that the extended runway and new funding will help Vendease achieve the milestones necessary for a Series B round, he did not specify what those milestones are. Given the company’s challenges, profitability and sustained growth in dollar terms will likely be key hurdles.
Vendease’s restructuring underscores a broader trend among Nigerian startups adjusting to economic realities—focusing less on rapid expansion and more on profitability, efficiency, and sustainable business models.
Ngozi Chukwu reports on startups and venture capital for TechCabal. She can be reached at ngozi@bigcabal.com or on X, @NgoziChukwu_.