Vendease restructures salaries after significant employee layoffs

Nigerian food procurement startup Vendease, supported by Y Combinator, has made significant changes to its employee salary structure. This decision follows a recent layoff of 44% of its workforce, which totaled around 120 employees. This marks Vendease’s second round of job cuts in just five months. The company is now implementing a performance-based pay system along with an Equity Share Option Plan (ESOP). All employees were given a fixed salary of ₦140,000 (about $90) in February, and their pay can increase based on performance targets set by the company. By December, if employees meet certain goals, they could see their full salaries restored. Vendease, founded in 2019, aims to simplify food procurement for African restaurants. The startup argues that its changes are necessary to achieve profitability. Despite some revenue growth, the naira's depreciation has affected earnings. Inflation has further strained its financials, making it challenging to maintain profitability. The company also focuses on its buy now, pay later (BNPL) service, which helps lend to food businesses. Vendease has issued over $70 million in credit, maintaining a low default rate of under 1%. The appointment of CFO Mohamed Chaudry in early 2024 has sparked efforts to tighten financial controls and extend the company's cash runway. Vendease is currently seeking fresh capital and is in talks with potential investors. While there are reports of a possible sale, the company insists its founders are more focused on growth rather than selling the business. With a reduced workforce of about 150 employees, Vendease is pivoting towards technology-driven solutions to ensure sustainability in its operations.