6 months ago
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The logistics industry in Nigeria, like any informal sector, struggles with poor infrastructure and other inefficiencies, making it difficult for businesses — both large and small — to move and store goods.
Many startups have tackled middle-mile and last-mile delivery challenges, but one untapped area is providing an end-to-end fulfillment solution. Renda, a three-year-old startup, fills this gap by simplifying order fulfillment and retail distribution for businesses in Africa. It has secured a $1.9 million pre-seed round, money it will use to improve its offerings; to expand into more cities in Nigeria and Kenya, the two markets where it’s currently present; and grow its partnership network across these markets.
Ingressive Capital, a pan-African early-stage VC, led the round’s $1.3 million equity portion. Other participants included Techstars Toronto, Founders Factory Africa, Magic Fund, Golden Palm Investments, Reflect Ventures and Vastly Valuable Ventures. Additionally, Founders Factory Africa and SeedFi contributed $600,000 in debt funding.
The startup aggregates and provides access to end-to-end infrastructure that optimizes order fulfillment for businesses. Its solution allows them to access flexible storage, monitor and manage inventory, process and fulfill orders, manage deliveries and returns, and receive and reconcile cash on delivery in real time.
CEO Ope Onaboye, in a conversation with TechCrunch, explained that Renda uses an asset-light approach. Similar to companies like Flexport and ShipBob, Renda does not own its own assets. Instead, Renda partners with various providers in the chain — from warehousing and other storage companies through to those making deliveries on trucks and bikes and the companies needed to take payments since so many transactions are done in cash — allowing solutions tailored to each client’s needs without owning a fleet of assets.
According to Onaboye, this approach has helped Renda build an extensive partnership network enabling its clients to expand quickly across the country. The platform has over 300 warehousing and storage partners, more than 3,000 delivery assets, including trucks, vans and bikes, and 2,000+ cash collection partners.
“The beauty of Renda is that we do not own any assets. We don’t own any delivery or warehousing assets ourselves. Instead, we leverage existing resources across the country. We aggregate storage spaces and warehouses that may be underutilized and connect them with businesses needing storage solutions,” said the CEO, who founded the company with Bimbo Onaboye. “Similarly, we onboard delivery assets, including vans, trucks and bikes, that may be sitting idle and make them available to businesses for managing deliveries. Whether businesses want to handle their deliveries or entrust them to us, Renda provides the platform to streamline operations efficiently.”
Renda’s customer base has evolved since its launch in 2021. Initially serving small businesses, the logistics startup now serves e-commerce businesses, FMCG manufacturers, agriculture companies and manufacturers nationwide. Its current clientele includes OmniRetail, Jumia, M-KOPA and Dangote, highlighting the diverse range of businesses that use its solution for their logistics needs.
Prioritizing enterprise-level entities, typically higher-value clients that commit to contracts lasting 12 to 24 months over small businesses, has benefited Renda’s business. For instance, the startup, in addition to achieving profitability, saw its revenues grow 450% year-on-year, the CEO claims. “This is not something we did overnight because we had to build those relationships and infrastructure around it. But the good thing is that we’ve built a solid management and leadership team with experience from well-capitalized logistics and e-commerce startups,” he added.
Renda’s revenue model revolves around five key drivers: storage, fulfillment, vehicle booking, deliveries and cash collection. For storage, clients pay based on square meters or per year. Fulfillment services are charged per item processed; vehicle booking incurs a daily fee; deliveries are charged per item delivered, and cash collection fees are based on a percentage of the collected cash.
Learnings from logistics experience
Logistics is inherently challenging, especially in Africa, due to its fragmented and informal nature. Businesses with logistical needs previously had to rely on informal warehousing or delivery agents before logistics platforms, most of which offered solutions in the middle or last mile, came along.
According to Onaboye, such businesses initially used these services separately but have realized they’re better off with a solution that offers fulfillment beyond the middle or last mile and integrates all aspects of their logistics operations over time. Haul247, Amitruck, and Leta are similar providers across Africa.
“Our goal is to simplify the process for businesses by providing a comprehensive platform to access all the services they need to expand across Nigeria and Africa without engaging multiple providers. It’s a challenging task, but once we establish a solid platform and master the aggregation model, scaling becomes much easier,” said the CEO, who noted that the complexity of building such a platform is also a moat for Renda.
The logistics platform has third-party teams that manage storage and fleet operations. They are responsible for the onboarding, verification, quality assurance, monitoring and evaluation processes of Renda’s storage and delivery partners. In addition, Onaboye draws from his background of owning a verification company that provides background check services to help with this process.
Once these checks are complete, Renda partners and drivers can manage their operations on dedicated apps and dashboards. The startup also provides apps for consumers and in-house admin purposes.
As the startup moves into the next phase of growth, it plans to introduce an embedded finance product for its partners, particularly drivers. This product will allow drivers to access loans weekly, which will be deducted from their payouts. Onaboye says this service provided on the app will address the immediate financial needs of drivers, such as vehicle repairs. According to the CEO, health insurance and fuel assistance are other services Renda has in the pipeline for its drivers. He also said the startup plans to use AI to automate its processes like helping partners save logistics costs and optimize routes.
The idea for Renda came about when Onaboye noticed the inventory and delivery challenges a friend faced when starting a business selling items from her house. Since its launch, the startup has helped over 500 businesses and reached more than 100,000 customers across 15 states in Nigeria. Renda, which claims to have processed more than 250,000 orders, expects its expansion into Kenya in late 2023 to serve as an entry into other markets across East Africa.
“Joining forces with Renda as an investor is a strategic move for us. Renda’s technology solution addresses a critical need in the African manufacturing and e-commerce ecosystems, offering seamless access to fulfillment infrastructure,” said Maya Horgan Famodu, founder and partner at Ingressive Capital. “We are particularly impressed by their track record of empowering businesses to thrive in this market and financials from the start of their business. With the current high inflation and skyrocketing prices for shipping and storage, there has never been a better time for Renda. We are doubling down our focus on marketplaces and solutions that promote commerce and strengthen African currencies by facilitating exports.”
