Logistics firm Sendy has shut down its retail and supplier trading platform known as Sendy Supply, and axed 20 percent of its workforce amid funding challenges.
Sendy has been forced to restructure on a funding drought that has hit Kenyan start-ups as developed economies raise the cost of lending.
The company, which started operations as a delivery service before spinning off e-commerce and retail supply platforms, has shut down the latter business line to focus on sellers placing goods in its warehouses for marketing and delivery.
Sendy Supply allowed retailers to make orders from different suppliers at discounts while outsourcing transport and logistics to the company.
“We have paused the Sendy Supply services, our solution that provides a platform for general retailers to purchase stock at competitive prices from multiple suppliers and manufacturers. This has effectively affected 20 percent of our workforce,” Sendy founder and CEO Mesh Alloys said.
The company says it wants to focus on fulfilment centres and transport business to leverage on uptake of digital commerce.
Sendy which has raised a combined $29 million (Sh3.4 billion), has been expanding since 2015, increasing its headcount from the four founders Mesh Alloys, Evanson Biwott, Don Okoth and American Malaika Judd, to 300 workers.
Since last year, the fund has been seeking to raise $100 million (Sh12 billion) for expansion into western and southern Africa, including Nigeria, Ghana and South Africa and Egypt.
The company faces similar difficulties to those that have hit the startup segment as funding dries up and dollar debt repayment costs soar on weaker shilling. The tech start-up industry has also been hit by a saturated market on explosion of service providers, targeting market dislocations caused by Covid-19.
Those hit hard include Egypt-based ride sharing app Swvl that suspended its intra-city and inter-city rides in Kenya, citing the global economic downturn, and Kenya-based cloud kitchen Kune foods that shut down affecting 90 workers.
I&M Burbidge Capital East Africa says the region faces significant headwinds going forward from global macro-economic and geopolitical developments including a higher interest rate environment, supply chain challenges and higher energy & commodity prices.
Higher interest rates in America and Europe means investors will retreat to their home market to make a decent return with less risks than gamble in emerging markets like Kenya. It is expected that most investors will slow down writing cheques to companies earning from markets such as Kenya in the short term.
At the same time, strengthening of the dollar affects earnings by local companies, as the shilling conversely weakens, making it expensive to make hard currency payouts.
Kenyan start-ups will now have a harder time raising funds and may be forced to cut costs to whether the current storm.
Alternatively they will also now turn to local angel investors and pension funds to get Kenyans to fund their own country’s tech revolution.
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