Vendease, a Nigerian food procurement startup, has raised $30 million in Series A funding (split between $20 million in equity and $1 million in debt). The company shifted its business model from acting as a middleman to buying discounted products in bulk, storing them, and delivering them via third-party logistics partners after noticing that some of its clients were unhappy with delivery times, quality of food supplies, and inadequate infrastructure to manage operations.
TLcom Capital and Partech Africa spearheaded the investment. Existing investors in the round include VentureSouq, Hustle Fund, Hack VC, GFR Fund, Kube VC, Magic Fund, and Kairos Angels (the company raised debt from the local debt market, according to a statement from the company).
“Something important to us about our current growth and impact is despite the ongoing global food supply shortage and inflation, Vendease is helping our users save big and provide relative stability for their stock levels. Shielding them (to a large extent) from the most severe effects of the current global shortage,” said CEO CEO Tunde Kara. “What excites us is we can have even more impact as we extend and entrench our technology within Africa and the rest of the world. And that’s what keeps us going.”
Vendease intends to utilise the investment to grow its operations, solidify its position in eight cities throughout Nigeria and Ghana (the firm recently expanded to the latter), enter new markets, and develop new products to boost consumer efficiency, according to Kara.
Last October, the YC-backed food procurement platform secured a $3.2 million seed round.
Why The Investors Invested
The startup has gained a lot of traction. Over the previous year, the platform claims to have transported roughly 400,000 metric tonnes of food for its over 2,000 customers, saving them approximately $2 million in procurement expenditures and over 10,000 person-hours.
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Investors were also seemingly excited by the major pivots the company has implemented after its last funding. While Vendease uses data to distribute working capital through its BNPL product, the firm’s approach has shifted from what it used to be: instead of utilising its own books, the company now collaborates with banks and financial institutions to provide finance through its platform. So far, firms have used the embedded financing product to access more than $12 million in inventory. Its income, which the firm claims has increased 5x in the last year, comes from supplier arrangements; it has yet to monetize its loan operation.
According to a statement released by Vendease, Andreata Muforo, a partner at TLcom Capital, and Cyril Collon, general partner at Partech Africa, are backing Vendease because they believe it can unlock significant value in Africa’s fragmented food supply chain and deliver robust solutions that impact critical issues surrounding the continent’s food system.
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The involvement of lead investors in this round, TLcom Capital and Partech Africa (both of which own substantial pan-African funds) as well as their being of the company’s board according to the CEO implies his business has backers “willing to go the long haul.”
A Look At What The Startup Does
Vendease was founded by Olumide Fayankin, Gatumi Aliyu, Wale Oyepeju, and Tunde Kara in January 2020 to solve challenges and inefficiencies in Nigeria’s highly fragmented food sector. Its marketplace model connects suppliers and farms to restaurants and food businesses, with deliveries made within 24 hours.
Vendease helps African restaurants and food businesses acquire supplies, access banking services, and operate. Vendease works hard to improve supply chain efficiency. According to the company, most consumers, including restaurants, hospitals, hotels, and schools, lose $100 billion annually. Unreliable supply and waste, little data for educated procurement decisions, and little or no procurement funding are all issues. Its stack-based platform helps food businesses avoid these losses and grow.
“We’re building technology to efficiently move food from the point of production to the point of consumption,” Kara said, about Vandease’s mission. “Everything we build at Vendease: financing, logistics, warehousing, inventory management, is tailored towards ensuring that food flows efficiently from that point of production to the point of consumption.”
Vendease has saved clients $500,000 in overstocking waste. The CEO credited this accomplishment to completely using firms’ data and providing them with inventory management resources at every step of their journey, including delivery routes. Vendease’s delivery time is now 12 hours.
“Since businesses don’t have access to accurate data, they usually buy what they dont need. We help them to solve that problem in two ways,” Kara commented on the company’s progress. “One, because businesses know they can get anything on our platform in 12 hours, they don’t need to stock some of the things they would’ve stored before. Two, they can also track what they bought and know how much is left before they need to buy again.”
Vendease views itself as a plug-and-play solution for yet-to-be-launched African restaurants and food enterprises in three to five years.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexpert