Vendease Secures $3.2M to Revolutionize Food Supply for African Hospitality

Vendease Secures $3.2 Million Seed Funding to Revolutionize Food Supply in Africa

Vendease, an online marketplace connecting restaurants and food businesses directly with manufacturers and farms, has successfully completed a seed funding round, raising $3.2 million. This information was confirmed by the company to TechCrunch.

Y Combinator Participation and Early Backers

This funding arrives approximately seven months after Vendease participated in Y Combinator’s winter program, alongside nine other startups originating from Africa. The company was initially founded in January 2020.

Investment Details

Global Founders Capital, a venture capital firm based in San Francisco, spearheaded the seed round. Key participants included Y Combinator, Hustle Fund, Liquid 2 Ventures, Hack VC, and Soma Capital. Furthermore, the round saw contributions from individual investors and early supporters, such as Tayo Oviosu, CEO of Paga, John Obaro, CEO of Remita, and Magic Fund.

Addressing Fragmentation in Africa’s Food Sector

Vendease aims to tackle the challenges and inefficiencies inherent in Africa’s fragmented food industry, beginning with a focus on Nigeria. The company initially established itself as a decentralized marketplace, linking suppliers and farms with restaurants and food-related enterprises.

Order Fulfillment and Logistics

When a food business submits an order, the system identifies potential suppliers capable of fulfilling it. It then evaluates pricing and quality to assign the order to the most suitable provider. Delivery is typically completed within 24 hours, utilizing either Vendease’s own logistics network or third-party providers.

Expanding Beyond a Marketplace

However, the company recognized a need to provide additional support to these businesses. Some faced issues with delivery timelines and the quality of supplies, while others lacked the operational infrastructure to manage them effectively.

Building a Comprehensive Operating System

According to Tunde Kara, co-founder and CEO, this realization prompted Vendease to develop a suite of integrated services – encompassing logistics, storage, payments, inventory management, and embedded finance – to oversee the entire food supply chain, from production to consumption.

“Our goal is to construct the operating system for food supply,” Kara explained, alongside co-founders Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju.

Quality Control and Customer Satisfaction

Vendease has implemented rigorous quality control procedures for food supplies, both upon delivery and during warehouse acceptance. The platform also offers a unique guarantee: food businesses can receive free supplies if an order proves unsatisfactory.

Navigating Food Price Volatility

Since its launch, Vendease has operated within a Nigerian market characterized by fluctuating food prices. Nigeria has experienced significant food price inflation, with items like beans increasing by over 70% between July 2020 and July 2021.

Predictive Analysis and Storage Solutions

Kara states that Vendease has developed a predictive analysis system and storage capabilities to assist businesses in anticipating future food prices, proactively storing supplies, and securing pricing for specified periods.

This approach, according to the CEO, has resulted in substantial cost savings and reduced operational burdens for businesses on the platform.

Significant Cost Savings for Businesses

“We’ve helped our users save approximately $480,000 in the last nine months by offering prices lower than those available in the open market,” Kara stated. “These savings can be reinvested into expansion and growth initiatives.”

The company anticipates increasing this figure tenfold within the next 12 to 18 months. Kara added, “We are contributing, in a small way, to the growth of the GDP for both farmers and vendors within our marketplace.”

Time Savings and Food Volume

Vendease estimates that businesses utilizing the platform have collectively saved around 5,000 person-hours. The company has facilitated the movement of 100,000 metric tonnes of food. This is a considerable achievement for a company just over 18 months old.

Data-Driven Warehousing and Logistics

The volume of food handled, combined with Vendease’s technological infrastructure, has enabled the company to analyze customer preferences and establish its own warehousing and logistics services.

Financial Performance and Growth

Last month, Vendease achieved an annualized transaction volume of $12.9 million and $1.2 million in annual recurring revenue. While specific revenue figures were not disclosed, Kara confirmed a 17-fold increase in revenue compared to the previous year.

Supply Chain Finance Access

Over 1,000 businesses on the platform have accessed more than $3 million in supply chain financing to date.

Competitive Landscape

Digitizing the food supply chain for restaurants and food businesses in Africa has been a relatively untapped area since Twiga’s launch in Kenya seven years ago.

Vendease aims to become the leading player in this emerging market, alongside newer competitors like Kenya’s Kibanda TopUp. Kara believes the company’s execution, operational expertise, and data insights will provide a competitive advantage.

“However, we view competition as a positive validation of the work we are doing,” he said.

Current Operations and Expansion Plans

Currently, Vendease operates in three Nigerian cities – Lagos, Abuja, and Ibadan – serving prominent food brands such as Hard Rock, Krispy Kreme, and Shiro.

The company intends to utilize the new funding to expand into additional cities and countries before the end of the first quarter of next year. Furthermore, the funds will be allocated to enhance its technology stack and forge partnerships with payment platforms and banks to expand its financial product offerings, including buy now, pay later options.

Investor Confidence

Donald Stalter, managing partner (U.S.) at Global Founders Capital, stated, “Having backed Jumia, one of Africa’s first unicorns, we recognize exceptional talent in the market. Tunde and the Vendease team are best in class, both within EMEA and globally. Their focused approach and rapid growth are remarkable, and a significant opportunity lies ahead.”