Kobo360, the Nigerian freight logistics startup that raised $79 million in funding, has hit a major roadblock. Investors, including Juven, the African investment arm of Goldman Sachs, IFC, and TLcom Capital, have sold their shares to co-founder and former CEO Obi Ozor, who is now back at the helm. The deal marks a significant write-off for investors, who had backed Kobo360 as a transformative force in African logistics.

The company's struggles are attributed to the challenging macroeconomic environment, which has created headwinds for startups across emerging markets, including in the logistics sector. According to the International Finance Corporation (IFC), "IFC remains committed to supporting entrepreneurs driving innovation and development across the continent." However, Kobo360's growth stalled after a bank partner cut off its credit line due to unserviced debt, leading to a cash flow crisis.

Kobo360's model, which aimed to digitize freight logistics by matching truck owners with businesses needing to move goods, seemed promising at first. The company secured $20 million in Series A funding in 2019, followed by a $48 million Series B in 2021. At its peak, it aggregated over 50,000 trucks, expanded into seven African markets, and signed up corporate clients like Unilever, Dangote, and DHL. However, the company's Achilles' heel was always working capital, which forced it to rely on bank credit lines.

The loss of funding led to a downward spiral in revenue, as Kobo360 struggled to pay truck drivers on time. Investors began to lose faith, and in October 2024, CEO Ciku Mugambi stepped down, followed by several senior executives. The company was left with a skeletal staff, and its future looked uncertain.

The logistics sector has seen a drop in investor interest, as venture capital firms prioritize profitability over aggressive expansion. In 2024, only three African logistics startups raised venture capital, securing a combined $2.1 million, a fraction of the amounts raised in previous years. Lori Systems, another high-profile freight tech startup, has not disclosed new funding, while Sendy pivoted from logistics before eventually shutting down.

The fundamental challenge facing logistics startups is that they are capital-intensive and dependent on credit cycles. Many investors now doubt whether digital freight platforms can scale profitably without constant injections of external funding. Ozor's plan to revive Kobo360 without venture capital remains unclear, with sources indicating that he is seeking traditional financing and haulage partnerships to restart operations.

The big question is whether Ozor can revive the company without venture capital. The company has not publicly announced a turnaround plan, and its CEO position remains vacant. As Kobo360's dramatic fall serves as a cautionary tale for the logistics sector, one thing is clear: the road to recovery will be long and arduous.