Kune Food, a Kenya-based cloud kitchen has shut down, causing over 90 employees to lose their jobs. Founded in December 2020, Kune Food offers ready-to-eat meals at affordable prices. In the early months of 2021, following a raise of over $1 million in pre-seed funding and some undisclosed loan from the bank in Kenya, the startup began operations with a trial in the same country.
Announcing the shutdown via his LinkedIn page, Robin Reecht, Founder and CEO of the Kenyan startup, detailed the reasons for the closure as tied to the “economic downturn and investment markets tightening up.” These concerns of Robin echo the general skepticism that has hit investment markets globally, carrying in its wake a flurry of layoffs and hiring freezes in startup companies.
Startups in Africa generally grapple with a lot of issues that stifle their growth from dearth of good market research to team disagreements, poor execution and inflexibility, lack of finance, and government bottlenecks. According to Failory, about 7.5 out of 10 venture-backed startups fail globally. For Africa, this number is yet to be ascertained as the ecosystem is still relatively young.
Just this year, the startup had announced interests in raising about $3.5 million to boost its production, from investors, especially as it planned to consolidate its growth and ensure its attractiveness to investment. On this, Robin writes that,
Since the beginning of the year, we sold more than 55,000 meals, and acquired more than 6,000 individual customers and 100 corporate customers. But at $3 per meal, it just wasn’t enough to sustain our growth… Coupled with rising food costs deteriorating our margins, we just couldn’t keep going.
During its kick-off, the startup had raised controversies, with a huge backlash on Twitter on its claim, in a TechCrunch interview, that the launch of Kune was in reaction to the challenge of getting affordable and ready-to-eat meals in Kenya.
Many Kenyans on Twitter abrasively attacked the founder for the gain of white privilege, rather than a compelling business plan, in his ability to raise funds to kickstart the startup. Robin had to respond with an apology to ease online tensions on the startup’s value.
The startup had previously said that it had invested much of its funds in research and development to ensure that with its strong and dedicated in-house team, the startup was working consistently to menu advancement and meeting the changing demands of its customers. The startup had also established hubs across Nairobi, to be closer to its target client.
Kune’s investors over the rounds it had closed in the past, included Launch Africa Ventures, Century Oak Capital GmbH, and Consonance.
Find below a full excerpt of Robin’s statement.
Sad day. Kune Food closed down today.
Since the beginning of the year, we sold more than 55,000 meals, acquired more than 6,000 individual customers and 100 corporate customers. But at $3 per meal, it just wasn’t enough to sustain our growth.
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.
My first thoughts go to my team. You put your heart and soul into building the Kune that so many people loved. I’m deeply sorry it didn’t work out.
To all my fellow entrepreneurs, please check the Kune “employee page” on LinkedIn and see if your recruitment needs could be filled by some of our team members. I know those are difficult times for you too. But they are terrific people who will bring tremendous value to your company. You can call me if you need any reference on a Kune employee.
My second thought goes to our investors. Some of you joined the Kune journey when it was just me and a Chef, delivering food on foot to a nearby office. Some others joined later and helped us grow into a foodtech startup with a tech platform, a factory, a kitchen studio, 7 distribution hubs, 6000 customers, and a team of 90 people. 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.
My third thought goes to suppliers, customers, bankers, and partners of any sort who supported us along our way. I’m sincerely sorry for the outcome.
Many things could have been done differently, better certainly. The coming months will allow us to reflect on Kune’s failure, and I hope to share about it when the time will be right.
If you know anyone who could be interested to acquire Kune’s IP or Assets, please reach out by PM.