Gokada, Nigeria’s largest-mile logistics delivery startup, has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware in 2024.
The filing highlighted significant financial difficulties, with liabilities exceeding $5.4 million against assets valued at just over $564,000.
According to the court documents, Gokada principal assets include its 100% ownership in Gokada Rides limited, it’s Nigerian operational entity which it valued at $500,000, and $64,132.56 in cash held in a Silicon Valley bank account.
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However, the company’s liabilities paint a grim picture, after documents revealed estimated liabilities of $1,000,001 – $10 million, with $5.3 million in nonpriority unsecured claims and $150,000 in secured debt tied to a loan from Deplacer LLC.
In the bankruptcy petition, CEO Olutosin Oni affirmed the accuracy of the financial data, stating; “I have examined the information in this petition and have a reasonable belief that the information is true and correct”.
Gokada’s largest shareholder is Adventure Capital LLC, which owns 31.94% of the company. In total, there were 78 creditors listed in the filing.
Revenue Decline
Gokada’s statement of financial affairs in bankruptcy filing showed a notable decline in the company’s earnings, reporting revenues of $268,779 in 2023 which fell to $118,988 in 2024. This decline underscored its struggles to generate sustainable income.
Reasons for Bankruptcy
- Declining revenues due to increased competition in the ride-hailing and logistics sector.
- Rising operational costs significantly outpaced revenue growth.
- Inability to secure additional funding or investment to sustain operations.
- Challenges in adapting to regulatory changes impacting the company’s business model.
Backstory
Gokada launched in 2018 as a ride-hailing company in Lagos, Nigeria. The company went on to launch a super app after it crossed US$100 million in annualized transaction value, having completed 1 million food delivery and e-commerce orders on behalf of over 30,000 merchants.
In 2021, the Nigeria-based last mile delivery, logistics and transportation start-up launched in Ibadan following consolidated growth in Lagos. Having established a strong track record in Lagos, completing more than 1.5 million deliveries, Gokada was focused on replicating its success in Ibadan.
It eventually faced a highly competitive and heavily regulated transportation market in Nigeria. Regulatory bans on motorcycles in Lagos, a major hub for its ride-hailing services, forced the company to pivot to delivery and logistics services. However, these new ventures failed to generate sufficient revenue to offset its losses.
In early 2023, the company faced significant layoffs impacting its workforce. Gokada’s layoffs occurred in a challenging macroeconomic environment in Nigeria, which worsened economically over time. The company conducted layoffs as part of a strategy to operate more efficiently in response to these tough economic conditions. On January 31, 2023, Gokada made a decisive move to lay off 54 employees, particularly affecting the quality assurance and rider-operations teams.
This action followed an earlier round of layoffs in November 2022, where 20 employees were let go, as the company aimed to extend its financial runway and adapt to the economic realities. raising funds from investors. In a surprising move, the company also attempted to crowdfund $100,000 in early 2023, adjusting down from an initial target of $750,000. This fundraising effort reflected the ongoing financial challenges Gokada faced, despite having raised $5.3 million from venture capitalists in 2019.
Gokada’s financial struggles, exacerbated by a decline in revenue, regulatory hurdles, and its inability to adapt profitably to a changing market, ultimately led to its insolvency. The recent Chapter 11 filing for Bankruptcy, aims to allow the company to reorganize and potentially find a path forward under legal protection.