Kune – a Kenyan food tech startup that delivered ready-to-eat meals at affordable prices has shut down its operations, affecting 90 of its employees.
The Reasons For Closure
Founded in December 2020 by Robin Reecht, Kune closed down four months after commencing its operations. The startup in June 2021 raised $1 million in a pre-seed funding round and also borrowed an undisclosed amount from a bank in Kenya. Earlier this year, the startup hinted it was raising $3.5 million from local and international investors to ramp up their production capacity.
Announcing the closure of its business, Reecht in a statement said that Kune’s operations were stopped as a result of “economic downturn and investment markets tightening up”.
“With the current economic downturn and investment markets tightening up, we were unable to raise our next round. Coupled with rising food costs deteriorating our margins, we just couldn’t keep going,” he said.
What Seemed to be the Problem
Kune had sold over 55,000 meals and had acquired 6,000 individual customers and 100 corporate customers with the sale of its meal going at $3 per meal. The startup which was a welcome development by Kenyans still had its share of controversy. In June 2021, Reecht was under a huge lash by some Kenyans on Twitter following his interview on TechCrunch where he stated he was inspired to kick-start Kune after taking a trip to Kenya in November 2020 and having trouble getting affordable ready-to-eat meals.
Reecht said, “After three days of coming into Kenya, I asked where I can get great food at a cheap price, and everybody tell [sic] me it’s impossible,”
“It’s impossible because either you go to the street and you eat street food, which is really cheap but with not-so-good quality, or you order on UberEats, Glovo or Jumia, where you get quality but you have to pay at least $10”, he added.
Aggrieved by his comments, Kenyans voicing their critiques alleged that Reecht’s ability to secure funding so quickly was due to his white privilege rather than his business plan, which some believed aimed to solve a non existent problem. The conversations around Reecht’s statement gave rise to a broader conversation about white privilege and favouritism in tech, as well as Kenya’s neglect of its local founders.
The Rise and Fall Of African Startups
Speaking to Kune’s investors, Reecht said, “Not only did you invest in Kune but you gave us your time, brain-width, connections, and emotional support. I am deeply sorry that Kune’s vision didn’t come true. To betray your confidence is something for which I will never forgive myself.”
Despite the budding strides shown by African startups in the past years, a combined analysis by Business Insider and Business Lite Africa revealed that 11 startups closed their operations between 2021 to 2022. These startups jointly raised $3.6 million dollars within the first few years of their existence.
The startups had 80% of them having an all-African led team with 20% of them having a mix of whites and Africans. This is showing the shutdown rates for startups on the African continent between 2010-2018 at 54.20%.
Further, the analysis showed that Ethiopia (75%), Rwanda (75%) and Ghana (73.91%) were among the countries that experienced the highest shutdown rates amongst startups while Nigeria – among prominent startups hubs in Africa – witnessed maximum shutdowns at 61.05%, followed by Kenya at 58.73% and South Africa 54.39%.
The reasons for most of their shutdowns were attached to onerous terms and conditions of investors, harsh business environment, adequate funding and poor internet infrastructure.
Going forward, the African continent requires remedies to the highlighted issues raised to fit a more robust ecosystem moving forward.