Vendease and Quidax lay off staff as tech winter continues
Quidax laid off 25% of its headcount while Vendease laid off at least 40 employees
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Layoffs continue at Nigerian tech startups
Although layoffs were the theme of Q2 2022, the third quarter of 2022 has been as bad. We’ve seen some of the deepest cuts in Q3, with Meta laying off 11k, Twitter laying off more than half its staff, and there are rumors that Amazon and Google are looking to cut 20k jobs. It’s a tough time to be working in tech startups. These layoffs prompted me to ask in the newsletter three weeks ago if we’re truly at the end of the layoff cycle in Nigeria.
We’ve seen layoffs at Alerzo, 54Gene, Kuda, and salary slash at Quidax. After the flurry of staff and salary cuts, it was easy to feel like the worst had passed for the Nigerian ecosystem. Here’s what I wrote three weeks ago:
“What we saw from 54Gene last week shows that the worst has not passed. Like startups in the US, a few Nigerian startups too also leaned into the growth that came with the pandemic. Some of these startups raised money pretty fast and burnt it at even faster rates. As we head into 2023, we may very well see another round of layoffs in Nigerian tech startups. Survival is the name of the game, and no one can simply assume that 2023 will be an easier year.”
Quidax lays off 25% of staff
In August, Notadeepdive first broke the story of salary slashes at the Nigerian cryptocurrency startup, Quidax. Here’s what I wrote at the time: “Employees could choose to take salary cuts for three months or ask to receive their full salaries. For those who chose (30%) pay cuts, the understanding was that they would get back all the money they forfeited by the fourth month. Both sources say that a majority of the people within the company opted for pay cuts.” Two sources at the company told me that the 30% cuts they agreed to have since been paid to everyone. But they’ve now been hit with worse news.
Notadeepdive can now exclusively report that Quidax has now laid off 25% of its staff. With a staff strength of 84 according to LinkedIn, it means that the startup will lay off 20 people across departments. Employees heard the news at a company-wide all-hands call on Thursday morning.
The company’s CEO, Buchi Okoro, told employees on the call that the layoffs are a way of responding to changing conditions in the crypto markets. Two sources on that call quoted him as saying that the layoffs are a tough decision for the company and will take effect immediately. “By midday, most people within the company received an email that let them know if their roles were cut or if they were staying on,” one source told me.
It’s a tough turn of events for a company that started the year on a growth path, encouraged by growing crypto adoption in Nigeria and the frothy pricing of all the major cryptocurrencies. The company reportedly spent big on marketing, signing record label exec, Don Jazzy, as a brand ambassador. The startup also sponsored the reality TV show, Big Brother Naija, with one article from the Guardian sharing that the company gave away prizes worth “a total of N10 Million in cash prizes, an all-expense paid trip to Dubai is up for grabs.”
The company also ramped up hiring at the beginning of the year, with the assumption that the growth in the crypto space would only continue throughout the year. That assumption has now been put to test, with cooloffs in the crypto industry on the back of lower prices, collapses of exchanges like FTX, and a general shift in sentiment.
Notadeepdive contacted Quidax, but they declined to comment at the time of this report, citing the fact that they’re in the process of preparing communication that addresses the layoffs.
Vendease cuts deep after raising money
Much has been said about the downturn in funding for African startups–TechCabal did a great job providing the data here. It’s why the news of Vendease raising $30m in September 2022 broke through the noise; it was a rare big splash of funding news and it got all the headlines. Yet, two months after its big announcement, several sources confirmed that the startup is now laying off staff.
There have been rumors that the company has quietly laid off staff this year, but this week’s cuts, reported for the first time by Notadeepdive, represent the biggest cuts for Vendease this year. Two sources told me that at least 44 people across different roles and teams were affected by this week’s layoffs, while a third source claims that more than 40 people were laid off.
One source who asked to speak anonymously for fear that the company may not honor severance claims told me that there was no communication about the layoffs. “I basically slept an employee and woke up to a termination letter.” Multiple sources told me that they received their emails in the early hours of the morning with one person estimating that the email came in at 2 am on Tuesday.
Another source shared a copy of his termination letter with me. The terms of the termination letter stated that it was effective immediately and that severance would be two months’ worth of pay.
Several calls to the co-founders of Vendease went unreturned at the time of this report.
*This is a developing story
African startups are weathering the funding storm with acquisitions
A new report from Africa’s foremost digital economy consultancy, TechCabal Insights has revealed that acquisitions have become more frequent
in Africa’s tech ecosystem, showing signs of a maturing market. According to the report, 2021 saw 32 acquisition deals on the continent. At the end of Q3 2022, there were about 43 acquisition deals, signaling a consolidation trend.
After two years of continuous growth in VC investment, funding announcements have hit a plateau. Startups have resorted to cutting costs to extend their runway, and acquisition deals have become necessary for survival, particularly with startups operating in the same market. The number of acquisitions between startups operating in the same market increased from 31% in Q2 to 52% in Q3 2022.
The State of Tech in Africa Report compiled by TechCabal Insights, also found that the average seed ticket size remained stable at $2.5M in Q2 and $2.7M in Q3.
What I’ve been reading:
This article on FTX and how its inroads into Africa have left people in the lurch
An exclusive interview with Jumia’s new CEO that I wish I wrote first
All the lessons from a tricky time in tech condensed into one article