Exclusive: Twiga CEO closed a $35 million convertible bond deal before 6-month sabbatical

Peter Njonjo, the CEO of Twiga, a Kenyan startup that connects farmers to food vendors, announced his decision to take a six-month sabbatical from the company on Thursday, sparking fears that the company’s investors were pushing him out. Njonjo’s break comes just two weeks after Twiga successfully raised new funding to pay suppliers it owed. TechCabal previously reported that one of the owed suppliers, Incentro, a cloud service vendor, had asked a court to begin liquidation proceedings to force Twiga to pay its debts. Private conversations are still ongoing between both firms to resolve the dispute.

Cash-strapped, Twiga raised $35 million in convertible bonds—debt that pays interest but can also be converted into equity—from Creadev and Juven, two private equity investors who had previously invested in Twiga, one person with direct knowledge of the deal told TechCabal. The size and nature of the funding has not been previously disclosed.

Twiga did not respond to TechCabal’s request for comments at the time of this report.

Creadev, one of the two private equity firms that provided the latest round of capital to Twiga, is a subsidiary of Mulliez Family Association (AFM), the investment holding company that controls the fortunes of a French family-owned consumer goods conglomerate. Creadev typically invests between $500,000 to $10 million, with the potential to cut even bigger cheques when it doubles down on portfolio companies. Juven, the second backer and a Goldman Sachs spinoff, follows a similar investment strategy. The evergreen fund invests between $10 million and $30 million.

Creadev and Juven also did not respond to TechCababal’s request for comments.

Heading to an exit?

In private conversations, investors and long-time players in Kenya’s technology ecosystem speculated that the timing of Njonjo’s sabbatical, one week after new funding, may suggest that he is being graciously shown the exit by investors.

But two sources close to the matter insisted that Njonjo has a “great relationship with Creadev” and that the investment outfit is still “very supportive of the business.” Startups attempting to digitise the fragmented informal market for fast-moving consumer goods and packaged foods have been hard hit.

Twiga laid off 30% of its staff and changed its commercial model, shutting down its in-house sales department in favour of independent sales contractors. “Our investors are fully supportive of this transformation,” Njonjo had told TechCabal in August.

Despite Njonjo’s optimism, a prominent seed stage investor who did not want to be named so they could speak freely took a harder view.

“I’m 90% certain Peter was fired. This is how VCs are viewing it,” the investor said. “VCs in Africa are having a bad week” because of the recent news and internal conversations about Twiga and other struggling B2B e-commerce startups, the investor added. Across Africa, rising inflation and currency devaluation have brought economies to the brink and squeezed consumer spending.

Even with Twiga’s impressive funding, the business has struggled in 2023, citing an increasingly challenging business climate. One former Twiga vendor questioned the monthly burn rate of the firm, which has raised more than $150 million in equity and debt since 2017.

Twiga operates an asset-light model, so it did not own the trucks or warehouses that housed its operations, one former vendor told TechCabal. More than half of the amount Twiga has raised (about $80 million) was raised in the last three years after the departure of co-founder and former CEO Grant Brooke, who left in part due to differences in the direction investors wanted to take the company, a person close to talks at the time told TechCabal.

Peter Njonjo cofounded Twiga with Grant Brooke in 2014 to source fresh produce directly from farmers and deliver it to Kenya’s urban retailers. The B2B company is backed by investors like Genevieve Capital, Creadev, Juven AHL Venture Partners, and Omidyar Networks.