In the last decade, tech start-ups in Kenya have become a popular trend with a number of them, becoming the go-to favourites for a number of Kenyans, especially during the pandemic when many relied on online services. The likes of Kune Foods, Notify Logistics, WeFarm, and Sky Garden witnessed a boom during the period, leading to profits at a time many companies were struggling. However, as the country recovered, these tech start-ups recorded a funding drought that saw them all close down in a span of a few months. Currently, Sendy, a logistics start-up, is facing challenges that has seen it enter talks to be acquired.
According to Meshack Alloys, co-founder of Sendy, the company is in the process of an acquisition. “We are in the middle of an acquisition process but we are not shutting down operations. We will announce (the deal) in two weeks,” said Alloys.
The logistics start-up started facing challenges last year when it laid off 54 employees and wound down its retail and supplier trading platform known as Sendy Supply. In an attempt to turn around the slope, the company, which was valued at over Sh11.48 billion ($80 million), tried to attract more investors and the entice the already existing investors to add on their investment. As much as this resulted in additional funding, it also saw one of the existing investors pull out, leading to additional financial challenges.
This resulted in the company trying to minimize its expenses once more. In February, the start-up, which was co-founded in 2015 by Meshack Alloys, Evanson Biwott, Don Okoth, and Malaika Judd, exited its end-to-end fulfillment offering in Nigeria. The company had just entered the Nigerian market two years ago. Facing further challenges, the start-up announced a 10% cut of its workforce in July.
The current situation marks the latest setback for a crop of e-commerce companies that enjoyed a fine run, raising millions in funding and expanding it terms of value. With a number of e-commerce companies already shut down and some more expected to join them, the question that arises is, did the companies underestimate the market and expand to quickly or have investors found other more valuable investments leading to a funding crunch?
It is time for start-ups to focus on alternative funding options such as crowd-funding, more attractive products and services to attract investors and new ways of generating revenues, if they are to survive and thrive during the current funding crunch.
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