Lori Systems, an African on-demand logistics and trucking company that digitizes transportation and provides shippers with solutions to manage their freight and carriers, launched a pre-Series B round in which Google participated along with other existing investors. Sources say the company has risen to a slightly higher valuation than its last valuation of $110 million in 2020.
This undisclosed investment is Google’s third since the $50 million Africa Investment Fund targeting early-stage and growth-stage startups across the continent, which the company’s CEO, Sundar Pichai, announced last October. The fund is part of Google’s investment plan $1 billion in “technology-driven initiatives” over the next five years. The news also follows the launch of Google’s first product development center on the continent, in Nairobi, Kenya, the city where Lori Systems was first launched.
Last December, Google announced its first investment in Ugandan super app SafeBoda. During the announcement, Nitin Gajria, the Managing Director for Sub-Saharan Africa, said the Africa Investment Fund would not be limited to specific verticals or regions. “We focus on investments where we think Google could add value. If the founders are building interesting products solving real challenges in Africa, that would fit nicely into our investment thesis,” he said. added.
The following month, the fund participated in the $20 million Series A expansion round of South African games publisher and studio Carry1st led by a16z. With its most recent investment in Lori Systems, a Google spokesperson — asked about the fund’s investment strategy given that its investments come from three different sectors — told TechCrunch that the Africa Investment Fund has an eye on startups that it has a strategic overlap in key areas. verticals, including fintech, logistics, e-commerce and local language content.
In Africa, more than $180 billion is spent on transportation every year, and logistics accounts for more than 70% of a product’s price, according to reports. For comparison, it is 6% in the United States. The influence of logistics operations on products leads to various problems for operators, ranging from inconsistent pricing, which stems from a fragmented supply and demand market, to paper documentation and limited or no access to financing.
Companies like Lori are solving these problems and reducing costs through their on-demand logistics and trucking marketplaces, which connect shippers to transportation, help them move goods, expand working capital facilities, and provide them with software to manage their operations. Lori, in a statement, said it has helped thousands of shippers and carriers move more than $10 billion in freight across the continent since its launch in 2016.
The 2017 TechCrunch Startup Battlefield Africa winner currently has operations in Kenya, Uganda, and Nigeria. In 2019, we reported the company’s Series A round, which multiple publications quoted at $20-30m, led by Imperial Logistics (recently acquired by Dubai Ports World). Lori has raised a total of $38.2 million, according to Crunchbase. Some of its competitors include Kobo360, Sendy, and Sote.
Given that its last raise was almost three years ago, I asked CEO Uche Ogboi why it took so long for Lori, one of the most funded logistics companies on the continent, to secure subsequent funding and why she had opted for an extension instead of a new price. round. She said Lori has been focused on growth, sustainability and a path to profitability since her last funding round. According to the chief executive, the company has significantly expanded its product line and now offers a “fully digitized transport management platform”, built in response to the pandemic, which has disrupted trade flows for shippers and carriers. Its new products tripled transaction volume, while its market participation rate nearly doubled, she said.
“At this point in our journey, and in this current market, we have made the strategic decision to expand our Series A rather than raise a Series B on unfavorable terms,” Ogboi replied in an email response regarding company fundraising efforts and current VC. countryside. “We are excited about this opportunity to partner with Google and plan to reassess our investment options in the first half of next year.” Lori wants to use the new funds to develop new product lines and achieve profitability, added Jean-Claude Homawoo, co-founder and chief product officer.
It was not possible to find out how much Google’s Africa Investment Fund has invested in this round, as with investments in Safeboda and Carry1st. Still, it’s worth noting that the fund – which, according to its spokesperson, does not intend to direct investments but “to partner with the best investors who have a regional presence and local knowledge” – has mainly participated in extension agreements via convertible bonds.
“At Google, we understand the transformative power that digitalization can bring to the African continent. There is so much potential in the region, but it is only through innovation that it can be fully harnessed,” commented Gajria on Google’s involvement.”Lori Systems is a great example of how technology can be scalable across Africa and how, in turn, this can lead to significant economic development.