Digital logistics firm Sendy has closed its retail and supplier trading platform and send home 20percent of employees. Sendy has had to make changes to its operations due to funding challenges and expensive credit.
The firm started off as a delivery service before expanding into e-commerce and retail supply platforms. It is now focusing on sellers placing goods in its warehouses for marketing and delivery after selling the supplier trading platform, which enabled retailers to make orders from different suppliers at discounts. The firm also offered transport and logistics to the retailers on the platform.
Sendy co-founder and CEO Mesh Alloys noted that the startup will now focus on fulfilment centres and transport business to cash in on digital commerce.
“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,” Mr Alloys stated.
Sendy has raised $29 million (Sh3.4 billion) since it was set up in 2015. The founders were Mesh Alloys, Evanson Biwott, Don Okoth and American Malaika Judd. Since last year, it 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 firm has been hit by setbacks such as lack of and the costs of repayment of dollar debts has shot up courtesy of a weakening shilling. The tech start-up scene is also now saturated as more techpreneurs join the fray.
Some of the firms that have been affected 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 brought down the curtains on its operations.
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.