Peter Njonjo, the CEO of Twiga Foods, a Kenyan startup that links farmers with food vendors, closed a $35 million convertible bond deal before his 6-month sabbatical leave.
The CEO announced on Thursday that he would be taking six months of leave from the company. This decision raised concerns that Njonjo’s investors might be trying to force him out. Njonjo’s vacation occurred just two weeks after Twiga was able to secure fresh funding to settle its outstanding bills to suppliers.
As previously reported, Incentro, a cloud service provider and one of the outstanding suppliers, had requested that a court start the liquidation process in order to compel Twiga to pay its debts. Both companies are still having private discussions to settle the disagreement.
Cash-strapped, Twiga raised $35 million in convertible bonds from private equity investors Creadev and Juven, which are interest-bearing debt that can also be converted to equity. A person with direct knowledge of the agreement disclosed the transaction. The amount and kind of funding have not been made public before.
One of the two private equity firms that contributed to Twiga’s most recent round of funding, Creadev is a division of Mulliez Family Association (AFM), the holding company for investments that manages the finances of a family-owned consumer goods company in France. Usually investing between $500,000 and $10 million, Creadev can write even larger checks when it makes larger commitments to portfolio companies. The second investor, Juven, which is a spinoff of Goldman Sachs, makes investments along similar lines. The evergreen fund makes investments of $10–30 million.
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Investors’ opinions on Twiga’s CEO
Investors and longstanding members of Kenya’s tech community conjectured in private talks that Njonjo’s sabbatical period, which came one week after fresh funding, might indicate that investors are tactfully letting him go.
However, according to two people with direct knowledge of the situation, Njonjo and Creadev have a “great relationship,” and the investment firm is still “very supportive of the business.” Startups that are trying to digitise the dispersed, unorganised market for packaged foods and fast-moving consumer goods have suffered greatly.
In addition to changing its business strategy and laying off 30% of its workforce, Twiga eliminated its internal sales department in favour of independent sales contractors. In August, Njonjo declared, “Our investors are fully supportive of this transformation.”
Njonjo was optimistic, but a well-known seed stage investor—who wished to remain anonymous so they could express their opinions freely—took a more pessimistic stance.
“I’m 90% positive Peter got fired. This is the investor’s perspective, he said. The investor continued, “VCs in Africa are having a bad week” as a result of the recent press and internal discussions regarding Twiga and other failing B2B e-commerce startups. Rising inflation and currency devaluation have pushed economies in Africa to the verge of collapse and reduced consumer spending.
Twiga’s challenges
Twiga has suffered in 2023 despite its impressive funding, citing an increasingly difficult business environment. A previous Twiga vendor questioned the company’s monthly burn rate, given that it has raised over $150 million in debt and equity since 2017.
According to a former vendor, Twiga uses an asset-light business model, meaning it does not own the trucks or warehouses where its operations are located. Around $80 million, or more than half of the total funds raised by Twiga, were obtained in the three years following the exit of co-founder and former CEO Grant Brooke, who left partly because of disagreements with the direction investors wanted to take the business, according to a person with direct knowledge of the discussions at the time.
In order to procure fresh produce directly from farmers and distribute it to Kenya’s urban retailers, Peter Njonjo and Grant Brooke cofounded Twiga in 2014. Investors, including Omidyar Networks, Genevieve Capital, Creadev, and Juven AHL Venture Partners, support the B2B company.