Lori System Google AfricaLori System Google AfricaGoogle joined a pre-Series B round of funding for Lori Systems, an African on-demand logistics and trucking company that digitizes haulage and gives shippers tools to manage cargo and transporters. Other existing investors also participated.
According to sources, the business raised money at a somewhat higher valuation than its previous $110 million valuation in 2020.
This is Google’s third investment from the $50 million Africa Investment Fund, announced by the company’s CEO, Sundar Pichai, last October. The fund is meant to help early-stage and growing businesses on the continent. The fund is a component of Google’s five-year, $1 billion investment plan in “tech-led initiatives.” The announcement came after Google opened its first product development centre in Africa in Nairobi, Kenya, where Lori Systems was founded.
The previous Google investment
Google made its first investment in the popular SafeBoda app in Uganda last December. At the launch, Nitin Gajria, the managing director for sub-Saharan Africa, said that the Africa Investment Fund would not be limited to specific industries or areas. “We are concentrating on deals where we think Google may provide value.” He said, “Founders will meet our investment premise if founders make interesting technologies to solve real problems in Africa.”
The second round of funding came from South African game studio and publisher Carry1st’s $20 million Series A extension round, which a16z set up the next month. When asked about the fund’s investment strategy because it has come from three different industries, a Google representative responded that the Africa Investment Fund has an eye for startups with a strategic overlap, such as fintech, logistics, e-commerce, and local language content.
Transportation and its effects in Africa
According to studies, transportation costs in Africa exceed $180 billion a year, and logistics costs make up more than 70% of the cost of goods. In contrast, it is 6% in the United States. Because logistical operations affect products, operators have to deal with problems like uneven prices caused by a fragmented supply and demand market, paper paperwork, and limited or no access to financing.
Businesses like Lori help solve these problems and cut costs by connecting shippers with transportation, helping them move their goods, giving them access to working capital facilities, and giving them software to run their businesses. In a statement, Lori said that since 2016, Since it was first used, it has helped tens of thousands of shippers and carriers move more than $10 billion worth of goods across the continent.
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What is Lori systems’ plan for the investment?
CEO Uche Ogboi was asked why it took almost three years after its last capital raise for Lori, one of the best-funded logistics companies on the continent, to get more money and why it chose an extension instead of a new pricing round. She said that since the last time Lori raised money, she has been focusing on growth, sustainability, and a way to invest in Lorikeet’s Africa Investment Fund.
The company’s product line has grown significantly, and the CEO says it now has a “fully digitalized transport management platform.” This was Google’s Africa Investment Fund invested in Lori because the pandemic messed up the way shippers and transporters did business. She says that the company’s new products have increased the number of transactions and doubled the market share.
In an email, Ogboi said, “At this point in our journey and in this market, we decided to extend our Series A rather than raise a Series B on unfavorable terms.” We anticipate reevaluating our investment options sometime in the first half of next year. “We are excited by this opportunity to partner with Google.” Jean-Claude Homawoo, Lori’s co-founder and chief product officer, said the new money would be used to scale up new product lines and make the company profitable.
Similar to investments in Safeboda and Carry1st, it was impossible to determine how much Google’s Africa Investment Fund contributed to this round. But it’s interesting to note that the fund, which, according to a spokesman, doesn’t plan to lead investments but instead “partners with top investors who have a regional presence and local knowledge,” has mostly taken part in extension agreements through convertible notes.
“At Google, we know digitisation’s transformative potential for Africa.” “There is so much promise in the area, but Africans can completely realise it through innovation,” Gajria said of Google’s involvement. “Lori Systems is a great example of how technology can be used on a large scale in Africa and how this, in turn, can lead to much economic growth.”