Nobody is shocked that this Kenyan food delivery startup failed after one year

Kune, a startup that caused a stir last year for its white founder’s claim of inventing the delivery of “great food at a cheap price” in Kenya, has shut down. Mid last year, the company had raised $1 million in pre-seed funding to the ire of many who believed it aimed to fix a problem that didn’t exist.

CEO Robin Reecht blamed his company’s closure on an inability to raise more money from investors due to the ongoing global downturn. The business set out to break through in Nairobi, Kenya’s capital, at a low-margin price of $3 per meal even while managing the value chain from preparation to on-demand delivery. It did not succeed.

“Coupled with rising food costs deteriorating our margins, we just couldn’t keep going,” Reecht said in a LinkedIn post on June 22.

Startups fail all the time everywhere. Building a fast-growing business is hard. But Kune’s failure has elicited reactions beyond casual shrugs or empathetic goodbye tweets.

Kune ran out of money 

Reecht told employees, in a virtual meeting on June 22 announcing the shutdown, that Kune “ran out of money completely.”

That made a French investor who agreed to give them 30 million shillings ($250,000) pull back. The investor had funded other Kenyan food companies whose margins were shrinking from rising prices, Reecht, who is French, said according to an audio recording of the meeting reviewed by Quartz. The CEO’s address to employees in the meeting was first reported by Techspace.africa, a Kenyan outlet.

“I have spoken to 100 investors since the beginning of the year. I have exhausted all my options. I am just not able anymore to raise money. It’s impossible,” Reecht said.

Reecht founded Kune (pronounced koo-nay) in December 2020 because he thought no company was delivering affordable quality food in Nairobi. “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 Uber Eats, Glovo or Jumia, where you get quality but you have to pay at least $10,” he told TechCrunch almost a year ago after Kune raised $1 million in a round led by Launch Africa Ventures.

That Reecht has succumbed to another impossibility is a bit ironic, but perhaps validates the skepticism—and some rage—that greeted his comments last year (He later apologized for his choice of words.) Some people who led the backlash last June are back to say “of course you failed.”

Kune could not find a distress buyer

Reecht’s statement, in which he apologizes to the 90 employees who have now lost their jobs as well as disappointed investors and bank partners, highlights Kune’s metrics. They sold 55,000 meals this year, and had 6,000 individual and 100 corporate customers. He did not say how much money the business made.

The company may have been loved by some of its customers. “Kune had really good food, no lie. I enjoyed their meals,” one person said. But not being able to overcome food delivery’s thin margin pointed to a weakness: Kune hoped to burn money for a while towards profitability.

Reecht may well have gotten the money he needed in a different venture capital climate. While Kune divided opinion last year, including because Reecht was seen as another white man crowding out local Kenyan founders and that he hadn’t run a food business, some investors believed in the opportunity for cloud kitchens in Africa.

That said, Reecht offered to sell Kune to at least five Kenyan food companies. None would buy. “We don’t sell enough meals everyday and are still a niche product,” Reecht said as some of the reasons given.

“I’m very sorry that you are all losing your jobs. I am just very sorry,” he said.