Nigerian food procurement startup Vendease is restructuring its compensation system as it navigates financial pressures and strives for profitability. The Y Combinator-backed company, which laid off 44% of its workforce, around 120 employees, in January, has now shifted to a performance-based salary system, with additional compensation through an Equity Share Option Plan (ESOP).
According to documents obtained by TechCrunch, Vendease has introduced a phased salary recovery plan. In February, all employees received a flat ₦140,000 (~$90), regardless of previous salaries. Over the next few months, pay will increase incrementally, 30% of former salaries from March to May, 60% from June to August, and 90% from September to November, provided employees meet performance targets. Full salary restoration is expected in December, depending on both individual and company performance.
Under Vendease’s ESOP, the unpaid portions of salaries will be converted into share options, with half vesting over ten months and the remainder over three years. However, employees can only cash out these options at a fair market value determined by the board.
Cost-cutting and a shift in strategy
Vendease, which secured $30 million in its Series A round from Partech Africa and TLcom Capital, is making these changes as part of a broader push to stabilise its finances. A company spokesperson told TechCrunch that the restructuring aligns with a shift towards a more software-driven approach, moving away from direct management of logistics and warehousing. The startup also claims to have reached break-even and says it is prioritising financial discipline.
With roughly 150 employees left, Vendease is betting on internal restructuring, AI-driven efficiencies, and fresh capital to sustain operations. The company plans to focus more on its payments and credit marketplace while phasing out operationally intensive services.
Currency struggles and the BNPL push
Since launching in 2019, Vendease has positioned itself as a digital procurement platform for African food businesses. The startup previously claimed to have moved 400,000 metric tonnes of food for over 2,000 customers, saving them millions in procurement costs.
However, like many Nigerian startups operating in local currency, Vendease has faced financial headwinds. While its naira revenue has tripled since its Series A in 2022, the rapid depreciation of the currency has wiped out these gains in dollar terms. Inflation has further driven up costs, making profitability even harder to achieve.
One of Vendease’s key financial lifelines has been its buy now, pay later (BNPL) product, which provides short-term credit to restaurants and food businesses. The company has issued over $70 million in credit, with a reported default rate of under 1% over the past two years.
The startup’s CFO, Mohamed Chaudry, who joined in January 2024, has been driving a focus on BNPL as a path to profitability. But even with adjustments to the product, it hasn’t been enough to turn things around.
Fundraising and acquisition talks
Vendease is now in discussions with both existing and new investors to raise a bridge round, which it plans to use for technology growth and expansion rather than daily operations, TechCrunch reports.
As Vendease pushes forward with its restructuring and fundraising efforts, the coming months will be critical in determining whether its new strategy can drive long-term sustainability.
