Kenyan logistics startup Lori Systems has raised $2 million in a bridge round that values the company at just $5 million—a dramatic fall from its previous valuation of $120 million. The funding round, which closed in 2024, was led by Delta40 and included participation from Future Africa, FP Capital, and other unnamed backers. With this round, Lori’s total funding has surpassed $46 million, according to TechCabal.
Shrinking Valuations Mirror Sector-Wide Challenges
The steep valuation cut reflects not only Lori’s own struggles but also a broader trend of declining investor confidence in African logistics tech startups. Industry insiders suggest Lori fell short of delivering the exponential growth investors expected from its earlier rounds. Across the continent, logistics startups are facing mounting difficulties raising capital, with only a handful managing to close modest funding rounds in 2024.
Investors Remain Confident in Long-Term Potential
Despite the valuation drop, investors remain optimistic about Lori’s future prospects. In a statement, lead investor Delta40 cited Africa’s $180 billion trucking and logistics market—growing at 8% annually—as a major reason for backing the company. Delta40 believes Lori’s platform and evolving business model position it well to capitalize on long-term logistics inefficiencies.
CEO Maintains Focus on Profitability and Financial Discipline
Lori Systems’ CEO and co-founder Jean-Claude Homawoo stated that the company is on track to achieve profitability this year. He noted that reaching this milestone could open the door to traditional bank financing, a critical tool in a capital-intensive industry. Homawoo also claimed that Lori has steadily improved its EBIT margins over the past three years, though he declined to provide specific figures.
Addressing Africa’s Logistics Cash Flow Crisis
The company is reworking its financing model to address one of the biggest pain points for logistics startups—cash flow gaps. Currently, Lori pays transporters upfront while waiting 30 to 90 days for reimbursement from manufacturers and distributors, a structure that puts immense strain on working capital. Lori and other startups have relied heavily on revolving credit facilities, which have become harder to secure as investor confidence wanes.
New Financing Model Seeks to Offload Credit Risk
According to an anonymous investor, Lori is piloting a new model that shifts financing responsibilities to banking partners. In this arrangement, banks would fund transportation using invoice-backed facilities, allowing Lori to focus on execution without burdening its balance sheet. While this reduces risk, it also shrinks margins, as banks typically charge an 8% fee to facilitate the process.
Balancing Innovation with Economic Realities
Lori’s new model comes with trade-offs, as logistics partners often operate on thin margins and may struggle to absorb added financing costs. Analysts warn that high local interest rates—up to 3% monthly in Kenya—could make this model less competitive for price-sensitive customers. Still, Lori has secured partnerships with banks such as Ecobank to make the model viable in the long term, TechCabal reported.
Doubling Down on Tech and Sustainability
To remain competitive, Lori is expanding its technology stack and exploring the use of artificial intelligence to optimize route planning and match loads more efficiently. The company is also testing electric trucks to reduce operational costs, capitalizing on Africa’s lower electricity prices compared to diesel. Homawoo says these innovations align with the company’s mission to reduce the cost of moving goods across the continent.
Looking Forward Amid Industry Uncertainty
Founded in 2016 by Homawoo and Josh Sandler, Lori Systems was built to address inefficiencies in African logistics by connecting shippers with transport providers through an aggregator platform. As other startups in the space scale back or pivot, Lori’s focus is now on sustainable growth, profitability, and financing structures that support long-term stability. According to Homawoo, while execution remains key, the opportunity to transform African logistics remains as strong as ever.
Lori Systems’ journey from a $120 million valuation to $5 million highlights the challenges facing Africa’s logistics startups in a tough funding environment. Yet with a renewed focus on profitability, improved financial models, and technology-driven efficiency, the company is betting on a turnaround. “There are no flaws in logistics—just errors in execution,” Homawoo told TechCabal, emphasizing his belief that Lori’s best days may still lie ahead.