Reduced order volumes and fuel price hikes meant Sendy was making deliveries at a loss, with a reported monthly burn rate of $1 million.
Sendy, the end-to-end fulfillment platform, which shut down operations last month and is now seeking a buyer, was reportedly burning up to $1 million monthly at the height of its operations, a source familiar with the matter told TechCabal. Despite raising $20 million in January 2020 in a funding round led by Atlantica Ventures, Sendy began seeking buyers in August as costs continued to climb.
One source told TechCabal that costs rose due to factors like iterative fuel price hikes from 2022 and the August 2022 Kenyan elections that had many people apprehensive. “Most manufacturers scaled down production,” the source said, asking not to be named as they’re not approved to speak on the issue. “It meant reduced volume for Sendy as they continued transporting at higher fuel costs.” Because the logistics industry relies on economies of scale, small volumes present challenges, including higher costs and longer delivery times.
As Sendy continued making deliveries at a loss, it was banking on a market correction and order volumes to return to normal. “In situations like this, breaking even becomes a challenge, and you need funding to keep going,” the source explained. However, the fundraising environment worsened, forcing the company to lay off staff to extend its runway.
One source described a company that was running on fumes. In July 2022, it cut its workforce by 10% and made deeper cuts in October 2022 before exiting its Nigerian business later in February 2023. While sources close to the situation said Sendy has outstanding obligations, TechCabal could not independently verify the amount involved. But those obligations, which may have to be absorbed by the buyer, are a crucial reason why a sale has been complicated.
One publication reported that three buyers were in talks to buy Sendy. The startup has two products: Sendy Transport and Sendy Fulfillment. With Sendy Transport, businesses can find motorbikes and vans for transportation. Through Sendy Fulfillment, manufacturers were offered comprehensive services like pick, pack, ship, and warehousing. One source said the acquiring companies are primarily interested in Sendy’s proprietary technology. “Sendy has built great software to hail and track transport vehicles,” a source familiar with the talks told TechCabal. “The acquiring company can use the software to start a similar service that Sendy was running or use the software to run its fleet.”
Wasoko, one of the companies reportedly in talks to buy, told TechCabal via email, “We cannot comment specifically regarding Sendy at this time; however, Wasoko continues to explore strategic opportunities to expand its capabilities across Africa.” Sabi, another company linked with the transaction, also declined to comment.
Mesh Alloys, Sendy’s CEO, declined to comment on possible buyers in August but told TechCabal he expected a deal to be closed in two weeks. After the two-week period, Alloys did not respond to calls and messages from this publication.
Have you got your tickets to TechCabal’s Moonshot Conference? Click here to do so now!
