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Kenyan logistics startup – Sendy – faces administration amidst economic challenges

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Sendy, a prominent Kenyan logistics startup founded in 2014, has taken the path of administration to mitigate financial distress and devise a comprehensive restructuring strategy. This move comes as a response to the profound impact of the COVID-19 pandemic on the company’s operations.

Initially showing significant promise, Sendy garnered investment from notable backers such as Safaricom’s Spark Fund and MOL PLUS. However, the pandemic severely impacted the logistics sector due to widespread lockdowns, travel restrictions, and reduced consumer spending. These challenges profoundly affected Sendy, particularly given its close association with the manufacturing and retail industries, both hit hard during the pandemic.

To sustain itself, Sendy proactively implemented cost-cutting measures and adapted its business model. This included prioritizing end-to-end fulfillment and halting operations in Nigeria. Furthermore, the company aimed to connect online buyers with suitable logistics providers, shifting away from its asset-heavy approach.

Despite these strategic adjustments, Sendy continued to incur losses, experiencing a significant monthly burn rate of $1 million during the toughest phases. Factors contributing to this financial strain included escalating fuel prices and the uncertainties surrounding the August 2022 Kenyan elections.

Sendy’s entry into administration stands as a somber testament to the challenges that tech startups face, particularly in turbulent economic environments. The collapse highlights the importance of crafting sustainable business models, underlining the burden of an asset-heavy approach during market volatility.

Diversification emerges as a critical lesson from Sendy’s journey. Over-reliance on specific industries can prove detrimental during times of crisis. A diversified customer base might have fortified the company against the adverse effects of the pandemic on its key sectors.

Read also: Nigerian Fintech startup – PayDay – navigates acquisition talks and internal challenges

However, it’s crucial to recognize that Sendy’s issue is not an isolated incident in the Kenyan tech landscape. The ecosystem has witnessed other significant failures like Kopo Kopo and Craft Silicon in recent years. This underscores the inherent risks in the startup landscape.

Despite such setbacks, the Kenyan tech ecosystem remains dynamic and resilient. The government’s support, evident through initiatives like the Kenya Startup Act and the Kenya Innovation Fund, emphasizes the nation’s commitment to nurturing and propelling the tech sector.

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When I'm not reading about tech, I'm writing about it, or thinking about the next weird food combinations to try. I do all these with my headphones plugged in, and a sticky note on my computer with the words: "The galaxy needs saving, Star Lord."
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