Tunde Kara and Olumide Fayankin grew up watching their parents — a farmer and a restaurant owner — grapple with inefficiencies in Nigeria’s food system. Caused by layer after layer of middlemen that deliver food from the farm to vendors to consumers, negotiations between buyers and sellers was always murky. Payments were late. Deliveries were unreliable. Good food got wasted.
Kara and Fayankin, along with Gatumi Aliyu and Wale Oyepeju, launched Vendease to streamline the food supply chain by cutting most of the middlemen out of the equation. The Lagos-based company serves as a marketplace that connects restaurants and food businesses directly to farmers and manufacturers. It is also a logistics service, an inventory and business management partner, and a lender.
“At first we wanted to be an e-marketplace, but we realized we had to solve other issues,” Kara tells AFN.
B2B agrifood marketplaces are proliferating around the world, spurred by the Covid-19 pandemic’s impacts on global supply chains and traditional in-person business transactions. In Africa, a number of players including Twiga Foods and Kibanda TopUp in Kenya, East African Fruits in Tanzania, and Get It in Rwanda have set out to correct the inefficiencies and opacities in the continent’s food supply chains.
But like its peers in other African markets, Vendease is much more than a marketplace. That’s because Africa’s food systems are so under-resourced that startups looking to tackle issues in one part of the chain often have to build solutions for every part of the chain.
Transparent and reliable
Vendease’s trick to building a reliable B2B marketplace is making its own business needs as predictable as possible, starting with its suppliers. Vendease partners with medium- to large-scale farmers, as well as groups of small-scale farmers that grow scarce or speciality produce, to ensure a consistent supply of goods for its online catalog. What Vendease offers in return is pricing transparency and timely payments: two things Nigeria’s farmers rarely get from traditional intermediaries.
On the buy-side, Vendease has created a database and inventory management system to help restaurants and other food businesses using its catalog track their purchases and earnings. Such a system is a first for the company’s users, who otherwise rely on offline accounting methods. Vendease’s platform helps buyers anticipate their inventory needs and prompts them on when to place new orders. The system also helps Vendease manage its own stocking needs.
On a larger scale, the startup’s database gives it insight into what is happening with food prices – and enables the company to offer more predictable rates to protect users from frequent price surges.
“One of the biggest things we solved was the data,” says Kara. “Because we’ve been tracking pricing trends for around two years, we can predict price bumps and we help [businesses] plan for these price bumps.”
To ensure that Vendease can uphold its promise to customers for reliable deliveries, the company allows users to set delivery schedules in advance. This means that Vendease can plan in tandem with warehouse and delivery partners and map out efficient routes.
Vendease works with local logistics companies for about 70% of its orders, and handles about 30% of deliveries with its own drivers.
The startup also facilitates small lines of credit to customers placing orders on its site. It does this because many of the food businesses it works with struggle with cash flow challenges between restocking and sales. Often they’re shut out of traditional sources of capital, like bank loans, for being too small or too risky from banks’ point of view.
It both partners with banks and provides credit from its own books.
Vendease has acquired more than 1,000 users in Lagos, Ibadan, and Abuja since it launched in January 2020. Uptake of the platform accelerated during the Covid-19 pandemic, as more businesses turned to e-commerce. Kara estimates that Vendease has collectively saved restaurants and other food businesses in these cities hundreds of thousands of dollars.
The company, which participated in Y Combinator, closed a $3.2 million seed round in October, backed by Global Founders Capital, Hustle Fund, Liquid 2 Ventures, Hack VC, and Soma Capital. The funding is being used to support Vendease’s expansion beyond Nigeria into other African markets.