Vendease, a Y Combinator-backed food procurement startup operating in six Nigerian cities, has implemented its second round of layoffs in five months, affecting about 120 employees or 35% of its staff. The move is part of a broader restructuring effort aimed at achieving profitability and extending the company's financial runway.

This latest round of layoffs follows a previous one in September 2024, which impacted 86 employees or 20% of staff. According to a company spokesperson, the restructuring aligns with Vendease's shift toward a more capital-efficient model as it seeks to close a Series A extension round. The company has raised $72 million since its founding in 2019, but has struggled with macroeconomic headwinds, including naira devaluation and rising inflation, which have significantly increased operational costs.

Despite claiming 600% year-on-year revenue growth over the past two years, Vendease's growth remains stunted in dollar terms. The company declined to share specific revenue numbers, but its Chief Financial Officer, Mohamed Chaudry, attributed the revenue growth to the company's ability to monetize its demand for credit. Vendease's buy-now-pay-later (BNPL) offering, previously a loss leader, has been repurposed as a revenue-generating product, with the company switching to a daily interest model that enables it to profit from lending while customers pay pro-rata interest.

In addition to layoffs, Vendease has introduced in-house AI technology to automate previously manual processes, such as demand forecasting and resource planning. The company claims this shift is improving capital efficiency, although it has not disclosed specific cost savings or performance metrics. Vendease's investors, including Greenlights Ventures, Partech, Realm Capital Ventures, TLcom Capital, VentureSouq, Hustle Fund, and Hack VC, are supportive of the company's pivot, according to Chaudry.

The company's restructuring underscores a broader trend among Nigerian startups adjusting to economic realities, focusing less on rapid expansion and more on profitability, efficiency, and sustainable business models. As Vendease seeks to achieve the milestones necessary for a Series B round, profitability and sustained growth in dollar terms will likely be key hurdles. The company's ability to navigate these challenges will be closely watched, given its significance in Nigeria's startup ecosystem.

With its extended runway and new funding, Vendease is poised to achieve the necessary milestones for a Series B round, although the company has not specified what those milestones are. As the startup landscape in Nigeria continues to evolve, Vendease's restructuring effort serves as a reminder of the importance of adaptability and resilience in the face of economic uncertainty.