Online marketplace Vendease has raised $3.2 million in a just-concluded seed funding round. This comes seven months after the startup took part in Y Combinator’s winter batch where it participated with nine other startups from Africa. Vendease was founded in January 2020 by Tunde Kara, Olumide Fayankin, Gatumi Aliyu and Wale Oyepeju, and is an online marketplace that allows restaurants, hotels and other food businesses to purchase their supplies directly from manufacturers and farms using its platform.
With its platform, Vendease aims to mitigate the challenges, such as inefficiency and time constraints, associated with getting food supplies in the highly fragmented African sector. The company started out on a decentralized marketplace model – connecting suppliers and farms on one side with restaurants and food businesses on the other.
The seed funding round was led by San Francisco-based venture capital firm Global Founders Capital. Other participants include Y Combinator, Liquid 2 Ventures, Soma Capital, Hustle Fund and Hack VC. It also saw the participation of local investors and early backers including Remita’s CEO John Obaro and CEO of Paga – Tayo Oviosu.
Vendease’s operation entails generating all the possible suppliers that can fulfil an order when a restaurant or food business places it. Vendease assigns the order to suppliers based on best pricing and quality. The delivery is made within 24 hours by Vendease or third-party logistics providers, Vendease said. Vendease provides delivery services because it came to the realization that some suppliers needed this help because they do not have the sophisticated operations to handle them and because it might be the best way to ensure that deliveries are made on time. “So when we say we’re building the operating system for food supply, this is what we mean”, Vendease’s co-founder and CEO Tunde Kara said explaining the reason why the company provides supplementary services such as logistics, storage, payments, inventory management, etc., that it provides. This is done to control the movement of food supplies from the starting point of production to the endpoint of consumption.
Extensive quality control measures are employed for the food supplies at the point of delivery or acceptance into the warehouse, Vendease says. It also provides an option that enables food businesses to receive free supplies for any order that turns out unsatisfactory.
As with any business faced with risks, challenges and unforeseen circumstances, Vendease’s operation is threatened by the constantly increasing inflation in food prices in Nigeria. This has been the case since it launched in 2020, however, the startup seems to have created a medium to combat the challenges associated with the inflation of food prices. According to the CEO, Vendease operates a predictive analysis and storage system to help businesses forecast the future prices of food, store food items in advance and attach a price according to the duration and food category. Vendease’s CEO said that this model has saved businesses on its platform a lot of money and human capital. According to statistics, the prices of food items in Nigeria rose by more than 70 percent from July last year to July this year. A report by Trading Economics says that the cost of food in Nigeria has increased 19.57 percent in September 2021 compared to the same period from the previous year.
“When we compare market prices to what users buy on our platform, we’ve approximately saved them about $480,000 in the last nine months, cutting a lot of unnecessary expenses from their general costs — savings that can go into other things in terms of expansion and growth. Proactively, in our small way, we are helping to grow the GDP for the food businesses both on the farmers and vendor side of the marketplace” Vendease’s CEO Tunde Kara said adding that the company hopes to grow by at least ten times in the next 12 to 18 months. The CEO claims that the company has saved approximately about 5,000 person-hours and has moved 100,000 metric tonnes of food, which is impressive for a startup that is less than 2 years old.
“As a backer of one of Africa’s very first unicorns, Jumia, we’ve seen a great deal of talent in the market – and Tunde & the Vendease team are best in class both in EMEA and globally. Their laser focus and rapid growth are unprecedented, and there’s a massive opportunity ahead”, the managing partner at Global Founders Capital, the lead investor at Vendease’s seed funding round said.
The startup is currently operational in Lagos, Abuja and Ibadan and plans to use the funding to expand into other cities and countries by the end of the first quarter of 2022. It also currently works with popular food brands Hard Rock, Shiro and Krispy Kreme.