Embattled Twiga Foods which has been struggling to pay suppliers finally has some good news. The start-up Co-founder and CEO Mr Peter Njonjo has stated that 100 suppliers owed by Twiga Foods will soon have the arrears owed cleared.
“Last week, I signed over 100 letters to suppliers of Twiga, informing them that we have now finalised our restructuring and re-financing, and they will finally have their long outstanding dues paid.” wrote Mr Njonjo.
This is good news for the company’s suppliers some of whom were reported to be abandoning the company. This is because the long overdue debts are currently running into millions. In his personal blog post, the CEO does not give a timeline for the debt payment. He also does not indicate whether all suppliers owed will get paid.
Twiga Foods Liquidation Case
One debt dispute escalated into a lawsuit that saw the company face a liquidation suit. Incentro Africa, a Google Cloud service provider had gone to court seeking to compel Twiga Foods to pay up for services rendered. The court asked the two parties to seek an out-of-court resolution within 60 days.
“Parties are hereby encouraged to negotiate and come up with a settlement plan,” ordered High Court judge Josephine Mong’are. The two companies have until the 30th of November before the court gives its direction on the liquidation application by Incentro Africa. This is if the two do not reach an agreement. In the interim, Twiga Foods has a court ordered injunction in place.
Lack of Funding
Twiga Foods CEO claims the choppy waters the Agri-tech firm is navigating have been caused by what has been called the “funding winter”. Admittedly, after a decade where year-on-year funding has been on the rise, 2023 has seen the funds dry up.
Lexi Novitske, general partner Norrsken22, has recently warned that its bound to last, saying “we’re not at the worst point of this capital winter and they should plan to have 24 months of runway.”
The majority of venture funds invested in the continent’s start-ups have been from international investors. Blaming the US Federal bank hike of interest rates, Mr. Njonjo says “Within a few weeks, investment funds that were very engaged on our Series D capital raise started retreating, and just like that, the world had changed for start-ups in emerging markets”.
The company that raised up to KES 25 billion in 3 rounds has been forced to lay off staff. It has also changed its mode of operations, and as the CEO put it ”start a restructuring journey with significantly fewer resources than we were accustomed to”.
However, Mr Njonjo is not ready to throw in the towel. He claims that “94% of informal retailers are keen to work with Twiga”. Further, he states that the start-up at its zenith was among the top 10 revenue earners in the country. Mr Njonjo believes the firm has enough resilience to weather the current storm. Part of that will be weaning the company off investor funding.
