The co-founder of a freight logistics startup is embarking on a significant effort to revitalize the company after taking back control through an equity transfer. The plan involves restructuring outstanding debts with partner banks amounting to ₦10 billion and securing new financing to recommence operations by the second quarter of 2025, as per sources close to the company.
However, the road ahead is filled with challenges. The future of the company relies on securing long-term haulage contracts from major shippers and proving to lenders that the business can maintain a steady cash flow. These contracts are crucial for obtaining financing backed by contracts, where banks provide funding based on guaranteed future earnings.
In a message to employees who were recently laid off and are owed months of unpaid salaries, the co-founder mentioned that the company is close to finalizing crucial deals. He assured them that operations, currently halted in multiple markets, would resume by the second quarter of 2025, with plans to rehire laid-off employees by 2026.
Prior to facing financial difficulties, the logistics-tech startup had garnered acclaim in Africa, raising substantial funding from various investors and expanding its operations to multiple countries. However, the company encountered financial vulnerabilities as it heavily relied on short-term bank loans rather than sustainable revenue. This reliance led to a critical point when a key banking partner reduced its credit line abruptly, leaving the company unable to meet financial obligations.
As its financial situation worsened, some investors withdrew their support, while key executives departed. By late 2024, the company had halted operations in several markets, laid off staff, and was on the verge of closure.
Despite the setbacks, the co-founder remains optimistic about the company’s recovery, with a plan focused on reducing costs, restructuring debts, and rebuilding core operations. However, uncertainties linger regarding the new business model and the progress in securing financing.
Expressing confidence in the company’s potential for recovery, the co-founder referenced historical examples of businesses overcoming severe challenges to emerge stronger and successful.
Editor’s note: The correction has been made to clarify the status of the IFC’s investment in the company.