Lori Systems raises at $5 million valuation

Lori Systems, a Kenyan logistics startup backed by Google, raised $2 million in 2024 at a sharply reduced valuation of $5 million. This marks a big drop from its previous $120 million valuation. Delta40 led the funding round, with support from Future Africa, FP Capital, and other investors. This new funding pushes Lori’s total raise to over $46 million.

Lori’s massive drop in valuation shows how tough the market has become for African tech startups. It also points to Lori missing key growth goals that it promised investors. Many other logistics startups across Africa face the same issue—they have failed to deliver the fast growth investors expected from tech-powered operations.

In Kenya, only two logistics startups—Afrogility and ApexLoad—raised a combined $200,000. In Nigeria, three companies—Renda, Fez Delivery, and Cargo Plus—raised $2.1 million altogether. Despite these numbers, investors in Lori’s new round remain hopeful.

Delta40 explained their investment: “We backed Lori because Africa’s trucking and logistics sector is a $180 billion opportunity, growing at 8% every year. Lori’s model and tech give it a strong position even in tough conditions.”

Lori Targets Profitability in 2025

Jean-Claude Homawoo, Lori’s co-founder and CEO, said the company expects to become profitable this year. He believes hitting this milestone will unlock access to regular bank loans and reduce the need for high-interest credit lines.

Homawoo said, “Our lenders support profitable companies. That’s why we’re focused on reaching that point.” He also claimed Lori has improved its EBIT (earnings before interest and taxes) over the last three years, although he didn’t give exact numbers.

To fix cash flow issues, Lori is changing how it finances trips. The company usually pays truckers upfront but gets paid by cargo owners 30 to 90 days later. This time gap causes a strain on cash and forces startups to depend on short-term bank loans.

One investor said Lori is now testing a new system where banks directly finance the trips. Lori draws funds from an invoice facility, pays drivers, and the banks handle loan collection. Banks charge an 8% fee for this service.

The investor added, “Banks are better at loan recovery. So it makes sense to let them manage that part.”

The New Model May Lower Margins

While this new approach solves cash flow problems, it also reduces Lori’s profit margins. In the old model, Lori could earn interest from upfront payments. But in the new setup, banks keep that interest.

Steve Okoth, a director at DBO East Africa, said banks in Kenya charge as much as 2% interest per month, or even 3% for unsecured loans. This cost could be too high for manufacturers who already operate with tight budgets.

Still, Homawoo remains confident. “This model needs financial discipline and strong execution. Logistics has no flaws—only poor execution.”

Lori Systems Adapts and Innovates to Stay Competitive

Lori Systems launched in 2016 to cut the cost of moving goods in Africa. It connects shippers and transporters through its online platform. The company now operates in Nigeria, Kenya, and Uganda.

To keep up with the changing market, Lori is investing in new tech solutions. It uses AI to plan routes, match cargo loads, and boost efficiency. The company is also testing electric trucks, which could reduce costs due to lower energy prices than diesel.

“We believe electric trucks and smart logistics tech can lower transportation costs,” Homawoo said. “That makes products more affordable and helps African businesses compete globally.”

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