Lori Systems, a Nairobi-based logistics startup, has revamped its business model to tackle working capital challenges that have plagued the industry. The company has secured a $2 million bridge round, albeit at a significantly reduced valuation of $5 million, down from its previous valuation of $120 million.

The startup, founded in 2016 by Jean Claude Homawoo and Josh Sandler, connects shippers with transport providers through its aggregator platform. Lori provides working capital to help transporters deliver goods to its customers' vendors. However, the company's customers, typically manufacturers, distributors, and high-volume shippers, often have long payment cycles, creating working capital challenges for Lori.

To address this issue, Lori has introduced an invoice facility at the bank, pricing the interest at its rate, and using the funds to kick off the trip and pay the driver. The bank charges an 8% fee for financing the process. This tweak in the business model has enabled Lori to double its take rates, keep receivables low, and improve margins and EBIT, according to the company's CEO.

The logistics industry in Africa has long struggled with working capital challenges, making it difficult for startups like Lori to scale. The company's new approach aims to mitigate these risks and ensure sustainable growth. Despite the reduced valuation, Lori remains committed to achieving profitability this year.

The logistics sector in Africa is ripe for disruption, with opportunities for innovation and growth. Lori's revamped business model and fresh funding injection position the company for success in this space. As the company continues to navigate the complexities of the logistics industry, its ability to adapt and innovate will be crucial to its long-term success.

In related news, Niger State in Nigeria has waived right-of-way fees for fibre optic infrastructure, aiming to incentivize telecom operators and expand internet access. The move is part of a broader effort to attract private-sector investment and digitize public services. Meanwhile, angel investor Fisayo Durojaye has shared insights on the importance of local context in startup investing, emphasizing the need for revenue-based modeling and price discipline.

The African tech ecosystem continues to evolve, with startups like Lori Systems pushing the boundaries of innovation and growth. As the industry matures, it will be essential to address the unique challenges and opportunities that arise, driving progress and development across the continent.