Peter Njonjo, the CEO of Twiga, a Kenyan startup facilitating connections between farmers and food vendors, announced last Thursday his plan to take a six-month sabbatical from the company. This decision raised concerns about potential external influences on his departure, coming on the heels of Twiga’s recent successful fundraising conducted just two weeks ago to settle outstanding debts to suppliers. A TechCabal report previously highlighted Incentro, a cloud service vendor and one of the owed suppliers, seeking court intervention for liquidation proceedings to compel Twiga to settle its obligations. Ongoing private discussions are underway between the involved parties to resolve the dispute.
Twiga, grappling with financial challenges, secured a $35 million convertible bond deal, involving debt with both interest payments and the option to convert into equity. The funding came from Creadev and Juven, private equity investors who had previously supported Twiga, according to an insider familiar with the deal. Twiga has not commented on the specifics of the funding in response to TechCabal’s request.
Creadev, one of the private equity firms involved, is a subsidiary of the Mulliez Family Association (AFM), which oversees the wealth of a prominent French family-owned consumer goods conglomerate. Creadev typically invests between $500,000 and $10 million, with the flexibility to provide larger sums when reinforcing support for portfolio companies. Juven, the second contributor and a spinoff from Goldman Sachs, follows a similar investment approach, typically investing between $10 million and $30 million. Notably, neither Creadev nor Juven responded to TechCababal’s request for comments.
In private discussions, insiders and longstanding figures in Kenya’s tech scene have speculated that Njonjo’s sabbatical, occurring just a week after a funding injection, could suggest a friendly departure orchestrated by investors.
However, two knowledgeable sources emphasize that Njonjo maintains a strong relationship with Creadev and highlights the investment entity’s ongoing support for the business. Startups aiming to digitize the decentralized informal market for fast-moving consumer goods and packaged foods have encountered significant challenges.
Twiga recently underwent a substantial restructuring, involving a 30% reduction in staff and a shift in its commercial model. The company closed its in-house sales department in favor of independent sales contractors. Njonjo, serving as Twiga’s spokesperson, expressed confidence in this transformation, citing full support from investors. Nevertheless, a notable seed stage investor, preferring anonymity, took a more critical stance, suggesting a potential departure of Peter Njonjo, stating, “I’m 90% certain Peter was fired. This is how VCs are viewing it.” The investor noted that VC firms in Africa are grappling with challenges amid discussions about Twiga and other struggling B2B e-commerce startups. Economic pressures, including rising inflation and currency devaluation across the continent, have strained economies and impacted consumer spending.
Despite securing substantial funding, Twiga faced challenges in 2023, citing a progressively difficult business environment. A former vendor raised concerns about the firm’s monthly burn rate, given its significant capital infusion of over $150 million in equity and debt since 2017.
Operating on an asset-light model, Twiga did not own the trucks or warehouses crucial to its operations, according to a former vendor shared with TechCabal. Notably, more than half of the funds raised (approximately $80 million) were secured in the last three years following the departure of co-founder and former CEO Grant Brooke. His exit was reportedly influenced by diverging views with investors on the company’s strategic direction.
Founded in 2014 by Peter Njonjo and Grant Brooke, Twiga’s primary mission is to source fresh produce directly from farmers and distribute it to urban retailers in Kenya. The B2B company boasts support from investors such as Genevieve Capital, Creadev, Juven AHL Venture Partners, and Omidyar Networks.
Source: Tech in Africa