Following the effects of COVID-19 and the war in Ukraine, food prices in Nigeria have soared to a 17-year high. According to the National Bureau of Statistics, the current inflation rate in Nigeria rose to 20.52% in August, the highest since October 2005. A recent market survey has shown that the cost of staples has risen over 100% in the last 5 years.
The hospitality sector has been especially impacted because food suppliers have had to raise prices to stay afloat. The price increase has complicated the procurement process, which was already arduous. To procure food supplies at good rates, restaurants are losing time and money, two already limited resources.
Providing a solution is Vendease, a Y Combinator-backed digital platform that allows restaurants in Africa to buy supplies, access financial services, and power their business operations. Founded by Tunde Kara, Olumide Fayankin, Gatumi Aliyu, and Wale Oyepeju, the startup has raised $30 million in an equity and debt funding round to consolidate its growth and operations in Nigeria and Ghana, and to support its expansion across the continent.
The series A equity round of $20 million was co-led by TLcom and Partech, two of the biggest Africa-focused funds. The equity round also included VentureSouq, Hustle fund, Hack VC, GFR Fund, Kube VC, Magic Fund and Kairos Angels, who re-invested after participating in the previous round. The $10 million debt round was raised from the local finance market. Following their investments, Andreata Muforo, a partner at TLcom, and Cyril Collon, a general partner at Partech, will join Vendease’s board as new directors.
Present in 8 cities across Nigeria and Ghana, Vendease makes bulk-buy deals with food suppliers, warehouses the food and guarantees delivery within a day for food supplies at considerably cheaper prices for restaurants. Over the last 12 months, Vendease has moved more than 400,000 metric tonnes of food through its platform, helping its users save more than $2,000,000 in procurement costs and more than 10,000 procurement man-hours. On a call with TechCabal, Tunde Kara, the CEO of Vendease, said that the company has seen 3x growth in the number of users on its platform and 5x growth in its revenue over the last 12 months. He added that these numbers showed that Vendease has helped to improve the efficiency of the flow of food.
On the call, Kara said that with this new funding, Vendease plans to help restaurants track the journey of food from how it enters the restaurant to how it eventually leaves the restaurant to the consumer. It also plans to deepen its presence in the 8 cities it is present in across Ghana and Nigeria, chase shorter delivery times and expand into a few more markets.
He added that some of the funding would go to Vendease’s enterprise resource planning (ERP) software. The ERP software automates the flow of food from farm to restaurant, optimises business operations across the value chain through accurate data deployment, reduces wastage, and drives profitability for restaurants. Although their software has helped their customers, there is still “a lot on the table” for Vendease to achieve, according to Kara.
With their ERP, any restaurant that decides to launch within the next 2 years would have access to a plug-and-play platform where financing, inventory management, recipe management, and other necessities are taken care of. According to Kara, this would allow anyone the opportunity to start a restaurant and is an opportunity that was not previously available.
According to the company, users have accessed more than $12 million worth of inventory via its embedded finance product. Kara said that this feature has seen enormous success because Vendease has taken the time to understand its user base. He added that the company uses data to help its userbase tackle its shoddy invoicing and inventory management systems, allowing them to pay back in record time.
Vendease originally started out as a marketplace that connected food suppliers to restaurants but decided to change its business model to an ERP solution when the company realised it could make an impact in the supply chain process.
Speaking on the raise in a statement, Andreata Muforo, partner at TLcom, said, “Restaurants and food businesses play a vital role in communities across the continent and Vendease is on a mission to bring affordability, convenience, and reliability to these businesses and builds a platform that allows the wider food sector to optimise their operations. We look forward to working alongside the team as they pursue the next phase of growth and unlock significant value in Africa’s fragmented food supply chain.”