Lori Systems, a logistics startup, is Google’s third investment from its Africa Investment Fund.
Google joined a pre-Series B round of funding for Lori Systems, an African on-demand logistics, and trucking company that digitizes haulage and offers shippers tools to manage their cargo and transporters. Other existing investors have also participated. According to sources, the business raised money at a somewhat higher valuation than its previous $110 million valuation in 2020.
The company’s CEO Sundar Pichai announced the $50 million Africa Investment Fund, which targets the continent’s early- and growth-stage startups, was announced last October. Google has made three investments from this fund, the third of which is undisclosed. The fund is a component of Google’s intention to spend $1 billion over the following five years on “tech-led initiatives.” Additionally, the news follows the opening of Google’s first product development center on the continent in Nairobi, Kenya, the city where Lori Systems was first established. The smart software SafeBoda from Uganda received Google’s first investment last December. Nitin Gajria, the managing director for sub-Saharan Africa, stated that the Africa Investment Fund would not limit itself to particular industries or geographical areas at the launch. They are concentrating their efforts on ventures where they think Google could be valuable. It would be completely consistent with the investment strategy if founders are developing intriguing technologies to address actual problems in Africa, he said. The global logistics sector has experienced significant innovation recently. Although technologies have not yet reached a critical mass, global supply chains urgently need modernization, according to Jean-Claude Homawoo, co-founder and CPO of Lori Systems. The African Continental Free Trade Area (AfCFTA) is anticipated to improve intra-African trade on the continent by 81 percent, opening up a $21.9 billion in unrealized trade potential that the 54 ratifying nations hope to take advantage of over the following five years. The key to seizing this opportunity is logistics. The next month, the fund took part in the $20 million Series A extension round of Carry1st, a South African games publisher and studio organized by a16z. When asked about the fund’s investment strategy given that its investments have come from three different sectors, a Google spokesperson said that the fund has an eye for startups that have a strategic overlap in key verticals, including fintech, logistics, e-commerce, and local language content. The fund’s most recent investment is in Lori Systems. According to studies, transportation costs in Africa exceed $180 billion yearly, and logistics costs make up more than 70% of the cost of goods. In contrast, it is 6% in the United States. Operators face a variety of issues as a result of the impact of logistical operations on products, including irregular prices caused by a fragmented supply and demand market, paperwork, and limited or no access to finance. By connecting shippers to transportation, assisting them in moving cargo, extending working capital facilities, and giving them access to software to manage their operations, businesses like Lori help address such issues and cut expenses. In a statement, Lori said that since its introduction in 2016, it had aided tens of thousands of shippers and carriers to transport more than $10 billion in cargo across the continent. The 2017 winner of the TechCrunch Startup Battlefield Africa is currently active in Kenya, Uganda, and Nigeria. It was reported that the company’s Series A round in 2019, was led by Imperial Logistics and was estimated by numerous outlets to be worth $20–30 million (recently acquired by Dubai Ports World). Crunchbase reports that Lori has raised a total of $38.2 million. Among its rivals are Kobo360, Sendy, and Site.
The company’s product line has greatly expanded, and the chief executive claims that it now offers a “completely digital transport management platform,” which was developed in reaction to the pandemic, which disrupted the trade flows of shippers and transporters. According to her, the company’s new offerings have increased transaction volume while nearly doubling the market take rate. Lori Systems is a fantastic illustration of how technology can be scaled up throughout Africa and how this can lead to significant economic progress.