Lori Systems, a once high-flying Kenyan logistics startup backed by Google, has seen its valuation crash from a peak of $120 million to just $5 million in a 2024 bridge round. The round raised $2 million and was led by Delta40, with participation from Future Africa, FP Capital, and other investors. Despite the markdown, the raise brings Lori’s total funding to over $46 million.
The steep valuation drop reflects not only Lori’s struggles but also a broader cooling in investor sentiment toward African startups, particularly those in logistics, where growth has failed to match earlier expectations.
Hope Amidst the Headwinds
Despite the down round, investors remain optimistic.
“Delta40 invested in Lori because of the immense opportunity in Africa’s trucking and logistics sector — a $180 billion market growing at 8% annually,” the firm said in a statement. “Lori’s technology and model uniquely position it to create and capture value, even in a tough macro environment.”
Co-founder and CEO Jean-Claude Homawoo is also optimistic. He believes the company will reach profitability this year — a milestone he says could unlock traditional bank financing and help address Lori’s long-standing working capital challenges.
The Cash Flow Crunch: A Sector-Wide Struggle
Lori’s financial hurdles mirror those of peers across Africa’s logistics sector. The typical business model requires paying transporters upfront, while payment from manufacturers and distributors can take 30 to 90 days. This mismatch puts enormous strain on startups’ balance sheets.
To fix this, Lori is now exploring a financing structure where banks fund trips directly via invoice financing. This keeps the debt off Lori’s balance sheet but significantly reduces margins, as banks charge up to 8% on such facilities.
“Since a bank’s core competency is recovering loans, it makes sense that they handle that,” one unnamed investor explained.
While more sustainable, this approach makes Lori’s services costlier — a potential drawback in a sector where cargo owners operate on razor-thin margins.
A Broader Industry Reset
Across Africa, logistics startups are adjusting expectations. In Kenya, Afrogility and ApexLoad managed to raise just $200,000 between them. In Nigeria, Renda, Fez Delivery, and Cargo Plus raised a combined $2.1 million. Many, like Kobo360, have struggled to stay afloat amid funding cuts and mounting debt.
The viability of the “asset-light” logistics model — where platforms connect shippers and transporters but don’t own vehicles — is now being questioned. While it promises scalability, the model relies heavily on external financing and has proven fragile under economic stress.
Doubling Down on Tech and Efficiency
Lori remains committed to innovation. The company has expanded its tech stack, deploying AI to optimize routes, improve trip matching, and streamline operations. It is also exploring electric vehicles as a way to reduce delivery costs in the long term, banking on lower electricity prices compared to diesel.
“These are just two of many innovations we’re leveraging to reduce the cost of transportation,” said Homawoo. “If we can reduce that cost, we can make African goods more affordable and competitive globally.”
Lessons Learned, Eyes on the Future
Homawoo is candid about past missteps, but maintains that Lori has made significant progress: it has doubled take rates, reduced receivables, and improved EBIT margins over the past five years. Still, challenges remain.
“There’s still a lot we need to do to be successful,” he admitted. “But there are no flaws in logistics — just errors in execution.”
Lori currently operates in Nigeria, Kenya, and Uganda, with Nigeria as its largest market. With new financial structures in place, a more disciplined approach, and an emphasis on sustainability and tech-driven growth, the startup hopes to make its model work — not just for itself, but for the entire African logistics ecosystem.