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YC-backed food supply startup Vendease restructures employees’ salaries

Vendease, a YC-backed Nigerian food procurement startup, has restructured its salary system to a performance-based model after laying off 44% of its staff. The changes aim to drive profitability amid economic challenges. With a new equity share plan, Vendease focuses on technology-driven operations while exploring new funding options to sustain growth.

Key points

  • Vendease laid off 44% of its workforce (about 120 employees) to cut costs.
  • The company has replaced traditional salaries with a performance-based pay system tied to different phases of salary recovery, contingent on meeting performance targets.
  • Vendease's restructuring includes increasing salaries gradually over several months, with unpaid portions converting into share options under an ESOP.
  • The company's shift towards a software-led model is intended to enhance operational efficiency and profitability.
  • Vendease's revenue has been impacted by the depreciation of Nigeria's currency and inflation, despite revenue growth in local terms.
  • A key revenue driver has been its buy-now-pay-later (BNPL) service, which has a low default rate, helping businesses access funding.
  • Vendease is exploring new investment rounds for growth and has received inquiries about potential acquisitions, though it denies intentions to sell.

Why it matters

  • The economic environment in Nigeria has been challenging for startups due to currency depreciation and inflation, leading to operational struggles for many businesses.
  • The restructuring reflects broader trends in the startup ecosystem where performance-based compensation is becoming more common as businesses strive for sustainability.
  • The BNPL model is gaining traction as it addresses financing gaps in sectors like food service, especially in volatile markets.

Vendease's salary restructuring and focus on technology aim to navigate difficult economic conditions and drive profitability. The company's adaptability is crucial as it seeks to secure funding while leveraging innovative solutions like BNPL to support growth.