Vendease, an online marketplace that allows restaurants and other food businesses to buy supplies directly from manufacturers and farms, has raised a funding round of $ 3.2 million, the company confirmed to TechCrunch.
The news comes seven months after TechCrunch announced that the company, founded in January 2020, had entered the Y Combinator winter lot that included nine other African startups.
San Francisco-based venture capital firm Global Founders Capital led the round. Y Combinator, Hustle Fund, Liquid 2 Ventures, Hack VC and Soma Capital participated, including individual local investors and early funders such as Paga CEO Tayo Oviosu, Remita CEO John Obaro and Magic Fund.
Vendease tries to solve Africa’s challenges and inefficiencies very fragmented food sector, starting with Nigeria. Initially, the company found a sweet spot in a purely decentralized market game connecting vendors and farms on one side with restaurants and food businesses on the other.
When a restaurant or food business places an order, the system generates all possible suppliers that can fulfill it, looks at the best price versus quality, and assigns that order to the supplier. According to the company, the delivery is made within 24 hours, either by itself or by third-party logistics providers.
Yet the company recognized that these companies needed more quality and operational support. While some complained about delivery times and the quality of the food supply, others did not have sophisticated operations to manage them.
Co-founder and CEO Tunde Kara told TechCrunch that this led Vendease to build a series of stacks – logistics, storage, payments, inventory management, integrated financing – to control the movement of food supplies from point of production to point of production. final consumption.
“So when we say we are building the operating system for the food supply, that’s what we mean,” said Kara, who founded the company with Olumide Fayankin, Gatumi Aliyu and Wale Oyepeju Olumide Fayankin , Gatumi Aliyu and Wale Oyepeju.
Vendease says it has also used extensive quality control measures for food supplies on its platform at the point of delivery or acceptance in its warehouse. The platform also has an option that allows food companies to receive free supplies for any order that turns out to be unsatisfactory..
From the launch of Vendease until now, one thing has remained constant in the industry in which it operates: fluctuating food prices in Nigeria..
With one of the highest inflation rates in the world, the country saw the prices of food items such as beans increase by more than 70% from July 2020 to July 2021.. This report says the cost of food in the country increased by 19.57% in September 2021 compared to the same month last year.
These are some of the unforeseen but battle-ready issues that agro-tech and food startups must deal with to scale.. In the case of Vendease, Kara says the company has created a predictive analytics and storage system to help businesses predict future food prices, store food in advance, and set prices for no. any length of time depending on the food category.
This process, according to the CEO, has saved companies on the platform a ton of money and human capital.
“When we compare market prices to what users buy on our platform, we’ve saved them around $ 480,000 over the past nine months, reducing a lot of unnecessary expenses in their overhead – savings that can be assigned to other things. in terms of expansion and growth.
Kara says the company hopes to increase that number tenfold over the next 12 to 18 months. “Proactively, on our small scale, we are helping to increase the GDP of food businesses both on the side of farmers and market vendors, ”he continued.
In terms of human capital, Kara says Vendease companies saved around 5,000 person-hours. Vendease has moved 100,000 metric tonnes of food, Kara added. For a startup that’s just over eighteen months old, moving that amount of food is a remarkable feat.
The movement of this quantity, coupled with Vendease’s technological stack, has allowed the company to analyze what its customers want before placing their orders, which is why the company now has its warehouses and its service. logistics.
Last month, the YC-backed company achieved an annualized transaction volume of $ 12.9 million and $ 1.2 million in annual recurring revenue.. Although Kara did not share the revenue figures, he said that Vendease’s revenue has increased 17-fold since last year..
On the platform’s financing side, more than 1,000 companies have accessed more than $ 3 million in supply chain financing until there.
Platforms digitizing the food supply chain for restaurants and food businesses across the continent have been rare in Africa since Twiga launched in Kenya seven years ago (with a slightly different model though).
Now that Vendease is in the fray, he wants to establish himself as the leader among an upcoming pack. more recent players such as Kibanda TopUp in Kenya. A prerequisite for this, according to Kara, is execution and operational knowledge of Vendease’s market and food business data; he thinks they’ll give the company an edge over other platforms.
“But then, we don’t see the competition as a winner in every situation. We see it as validation of the work we do, ”he said.
Vendease currently operates in three Nigerian cities – Lagos, Abuja and Ibadan, with some of the country’s biggest food brands such as Hard Rock, Krispy Kreme and Shiro.
Kara says the company will use the funding to expand into other cities and countries before the end of the first quarter of next year. In addition, the financing allows Vendease to continue to expand its technological stack, secure partnerships with certain payment platforms and banks to deepen its financial products, including buy now, pay later.
In a statement, the managing partner of Global Founders Capital said: “As a sponsor of one of Africa’s very first unicorns, Jumia, we have seen a lot of talent in the market – and Tunde and the team. Vendease are the best in their class. both in the EMEA region and globally. Their laser focus and rapid growth are unprecedented, and there is a huge opportunity ahead.