The logistics industry in Nigeria, like any informal sector, struggles with poor infrastructure and other inefficiencies, making it difficult for companies – both big and large small – Moving and storing goods.
Many startups have overcome the challenges of middle and last mile delivery, 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 pre-seed round of $1.9 million, the money will be used for this purpose improve its offering; expansion into additional cities in Nigeria and Kenya, the two markets in which the company currently operates; and expand its partnership network in these markets.
Ingressive Capital, a pan-African early-stage VC, led the equity portion of the round at $1.3 million. 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 financing.
The startup aggregates and provides access to end-to-end infrastructure that streamlines order fulfillment for companies. The 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 payments in real time.
CEO Ope Onaboye explained in a conversation with TechCrunch that Renda takes an asset-light approach. Similar to companies like Flexport and ShipBob, Renda does not own any assets of its own. Instead, Renda works with and enables various providers in the chain – from warehousing and other warehousing companies to companies that make deliveries using trucks and bicycles, and the companies that need to accept payments since so many transactions are conducted in cash thus solutions tailored to the needs of each customer owning a fleet of assets.
Onaboye says this approach has helped Renda build an extensive partnership network, enabling its clients to expand rapidly across the country. The platform has over 300 warehousing and storage partners, over 3,000 delivery vehicles including trucks, vans and bicycles, and over 2,000 cash collection partners.
“The beauty of Renda is that we don’t own any assets. We do not have any delivery or storage capacity ourselves. Instead, we leverage existing resources across the country. We consolidate storage spaces and warehouses that may be underutilized and connect them with companies that need storage solutions,” said the CEO, who co-founded the company Baby Onaboye. “Similarly, we are integrating delivery assets, including vans, trucks and bicycles that may remain unused, and making them available to businesses to manage deliveries. Whether companies want to handle their deliveries or trust us, Renda provides the platform to efficiently streamline operations.”
Renda’s customer base has evolved since its launch in 2021. Initially serving small businesses, the logistics startup now serves e-commerce companies, FMCG manufacturers, agribusinesses and manufacturers across the country. His current clients include OmniRetail, Jumia, M-KOPA and Dangote. This highlights the diversity of companies using the solution for their logistics needs.
Favoring enterprise-level companies, typically higher-value customers who commit to 12- to 24-month contracts, over small businesses has proven beneficial to Renda’s business. For example, the startup not only achieved profitability, but also recorded a 450% increase in sales compared to the previous year, the CEO claims. “This is not something we did overnight because we had to build the relationships and infrastructure around it. But the good thing is that we have built a solid management and leadership team with experience from well-capitalized logistics and e-commerce startups,” he added.
Renda’s revenue model is based on five key factors: storage, order fulfillment, vehicle booking, deliveries and cash collection. Customers pay for storage by square meter or per year. Fulfillment services are charged per item processed; A daily fee applies for vehicle booking. Deliveries are charged per item delivered and collection fees are based on a percentage of the cash collected.
Insights from logistics experience
In Africa in particular, logistics is inherently challenging due to its fragmented and informal nature. Companies with logistics needs previously relied on informal warehousing or delivery agents before logistics platforms came onto the market, most of which offered middle or last mile solutions.
However, according to Onaboye, such companies initially used these services separately have realized that they are better off with a solution that delivers 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 aim is to simplify the process for businesses by providing a comprehensive platform to access all the services they need to expand in Nigeria and Africa without having to engage multiple providers. It is 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 an obstacle for Renda.
The logistics platform has third-party teams that manage warehouse and fleet operations. You will be responsible for the onboarding, verification, quality assurance, monitoring and evaluation processes of Renda’s storage and delivery partners. Additionally, Onaboye draws on his background as the owner of a verification company that provides background check services to help with this process.
Once these checks are completed, Renda partners and drivers can manage their operations through dedicated apps and dashboards. The startup also provides apps for consumer and internal management purposes.
As the startup enters its next phase of growth, it plans to launch an embedded financial product for its partners, particularly drivers. This product allows drivers to access credits on a weekly basis that are deducted from their payouts. According to Onaboye, this service provided through the app will address drivers’ immediate financial needs such as vehicle repairs. According to the CEO, health insurance and fuel assistance are other services Renda plans to provide to its drivers. He also said that the startup plans to use AI to automate its processes and help its partners save on 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 home. Since its inception, the startup has supported over 500 businesses and reached more than 100,000 customers across 15 states in Nigeria. Renda, which says it has fulfilled more than 250,000 orders, expects its expansion into Kenya in late 2023 to serve as an entry into other markets across East Africa.
“The merger with Renda as an investor is a strategic step for us. “Renda’s technology solution addresses a critical need in Africa’s manufacturing and e-commerce ecosystems, providing seamless access to fulfillment infrastructure,” said Maya Horgan Famodu, Founder and Partner at Ingressive Capital. “We are particularly impressed by their track record of helping companies succeed in this market and in finance from the very beginning of their operations. With current high inflation and skyrocketing shipping and storage prices, there has never been a better time for Renda. We are doubling our focus on marketplaces and solutions that promote trade and strengthen African currencies by facilitating exports.”