OTTAWA — In late 2021, the six-year-old last-mile logistics startup GoFor was on the verge of striking gold. 

The startup had been chugging along, its small fleet of contracted drivers ferrying items like plywood and paint from hardware stores to worksites in major cities across Canada. Then, in the spring of 2020, COVID-19 hit North America. When the pandemic sparked a home renovation boom, and kept people away from stores, GoFor’s business took off.  

For 51-year-old CEO and founder Brad Rollo, it was the opportunity he’d long been chasing. His career in geographic mapping had been peppered with entrepreneurial pursuits—first as the owner of Ondago, a small-business development, sales and marketing consultancy firm, and then as a design-build contractor. While his ventures paid the bills, none had been as lucrative as it appeared GoFor was going to be. Now it looked like Rollo had finally built a unicorn, securing a legacy of wealth for his investors and his family. 

In 2020, Rollo had been diagnosed with terminal cancer, a disease that would take his life late the following year. Friends of Rollo’s who spoke to The Logic said he was concerned about leaving his wife, architect Melina Craig, and two young sons enough money when he was gone. 

Rollo saw his chance in a new investment frenzy emerging in the U.S., through which blank-cheque companies were taking startups public at enormous valuations. Suddenly, the Ottawa-based company was charting its path to the public markets. It would vet some 20 term sheets from special-purpose acquisition companies (SPACs) interested in taking it public through a merger, settling on a three-way combination with a SPAC and an American legacy logistics company. 

The transaction would have valued the new firm at about US$750 million, one GoFor investor estimated, netting the company’s early backers a return of more than 100 times their initial investment. 

But on the day GoFor was meant to sign the deal, the other logistics company changed its mind. Rather than take some stock and some cash from the transaction, the firm wanted to be fully compensated in cash. “That wasn’t financeable,” said Ian Gardner, a GoFor board member and the company’s CEO at the time. “Because the markets were correcting, the owners got spooked, and decided that they didn’t want to take the public-markets risk.” 

The 11th-hour condition killed the deal and nearly marked the end for GoFor, whose remarkable rise during the pandemic coincided with the founder’s harrowing personal battle.  

The Logic spoke with six sources with intimate knowledge of GoFor’s business leading up to and during the pandemic, including ex-board members and current and former executives. The Logic has agreed not to name some sources who were concerned about blowback within the tight-knit startup community. 

Their accounts tell the story of a startup whipsawed by the cycle of boom and bust, a story like that experienced by countless other companies over the last few years, with investors’ expectations swelled by a historically hot market for venture-backed startups, then crushed when the economy turned. 

“Everyone was kind of in this hope-and-dream mode of going public and making boatloads of cash,” said one GoFor investor who funded several logistics startups when lockdowns created an insatiable demand for last-mile delivery options. “Everyone was going to become millionaires by going public. And then that didn’t happen.”

GoFor’s failed go-public strategy sent the company into a financial crisis, the firm’s now CEO Dillon McDonald told The Logic. In the months following, it scrambled for a lifeline, finding one in New York-based private equity firm 3Q Investment Partners. 

3Q bought the firm for a fraction of what it would have fetched through its SPAC merger, according to a shareholder in the startup. It’s now operating GoFor as a going concern, slashing costs as it tries to get it to break even and eventually turn a profit. 

“I don’t think this is going to be an isolated case,” said an investor who backed GoFor in its 2020 Series A. “Those businesses just got ahead of their skis, growing way too fast, believing that they could continue to raise an infinite amount of capital and operate on negative gross margins just to get market share,” he said. “Take a peek across the country at every company that’s either going to go bankrupt or participate in a down round. Everyone’s going to get squeezed in some way or another.”

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Before Rollo started GoFor, he was a contractor himself, running Bramel Design and Construction in Ottawa. There, he saw first hand the time wasted running between hardware stores and job sites picking up equipment throughout the day. He thought there could be a better system.

In the beginning, he conceived GoFor as a kind of Uber Eats for contractors. Users would open the app and select whatever odds and ends they needed for their construction project. Workers at Canadian Tire or Rona would pack the order, and a driver contracted by GoFor would pick up the parcel and deliver it to the job site. 

While working on the concept, Rollo met software engineer and entrepreneur Basavaraj (Raj) Halli. “Brad had this idea and did not know how to get this thing going,” said Halli. “He wanted some technology and, essentially, advice.” The two would meet often for coffee, said Halli, tinkering with the concept and the technology.

By early 2016, Rollo and Halli were ready to launch. They soon learned, however, that they could generate more business and revenue if they worked directly with retailers rather than with individual contractors. “The supplier also has the same needs,” said Halli. “They make the sale but there’s no way to deliver soon enough.” 

The company pivoted to working directly with suppliers, signing contracts to fulfill deliveries of big and bulky packages for clients including Home Depot, Purolator and Sherwin Williams. 

“We had a very specific, focused thesis on one part of the construction delivery marketplace,” said an investor and former board member who worked closely with Rollo as an adviser from 2017 to 2020. The company was growing steadily and by 2019, while its revenue was modest—about $5 million or $6 million a year—it was breaking even, said the adviser. 

Then in spring of 2020—after a few weeks of COVID-fuelled panic that stalled the economy—the stars began to align for GoFor. 

Lockdowns across Canada kept most people cooped up in their houses. Work, school, weekends, vacations—the home was the setting for it all. With borrowing rates low, and investments performing generally well, many homeowners were accumulating cash, and renovating their increasingly cramped-feeling spaces was an attractive way to spend it. 

Spending on residential building construction projects soared from an already record $121.1 billion in 2019 to $164.6 billion in 2021, according to Statistics Canada. Meanwhile, social distancing measures made going to the hardware store unpleasant, inconvenient or impossible, spiking demand for delivery services like GoFor’s. 

“There was a bit of a perfect storm,” said the investor and adviser to Rollo. “They were in a really good position.” 

That source said the company tripled its headcount and revenue in 2020, ending the year with about 100 employees and $15 million in revenue, “and growing rapidly,” he said. 

In June 2020, GoFor raised $9.8 million before closing another $20-million Series A six months later, from investors including San Francisco-based Builders VC, New York-based Metaprop and Canadian firms Panache Ventures and Groundbreak Ventures.

But while the company was hitting its stride, Rollo was experiencing symptoms of what turned out to be stage-four esophageal cancer. By spring 2020, he had begun telling colleagues about his diagnosis and the company soon started succession planning. 

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Rollo met Ian Gardner through colleagues in the cleantech community in Los Angeles, where Gardner had been building an electric-vehicle delivery company called Royale EV. In his LinkedIn profile, Gardner describes the company as an “on-demand eFleet-as-a-Service platform for medium-duty electric trucks.” 

Though the business never took off, Gardner and Rollo became intent on using the model to set GoFor apart in the increasingly competitive last-mile delivery space—making the startup not just another Uber-style delivery service run on an array of driver-owned vehicles, but one that operated a fleet of company-branded, all-electric delivery vans. “Electrification was certainly a very big trend,” said Gardner. “Brad was a pretty progressive thinker, and saw the benefits of it.” 

Through 2021, Rollo began espousing the benefits of sustainable last-mile delivery in press material and interviews. But several sources, including two former board members, said the EV play was merely marketing. “It was all bullshit noise,” said one former board member who said he had a significant stake in the company. The real goal, said the investor, was to attract a buyer to take the firm public. “They were trying to position themselves to a bunch of SPACs that were attached to wallets or investors that had [environmental, social and governance] mandates,” he said. “That’s it. They were chasing money.” 

Its EV strategy coincided with mounting expectations from consumers and investors for companies to position themselves as sustainable. A PwC survey from 2021 found that 83 per cent of consumers think “companies should be actively shaping ESG best practices,” and 84 per cent of employees said they’d rather work for companies that value the environment. Meanwhile, investors poured close to US$650 billion into ESG funds in 2021, up from US$285 billion two years earlier. 

GoFor’s go-public push also landed in the middle of an unprecedented SPAC craze. The vehicle offered startups a faster route than a traditional IPO to what had become a white-hot public market, and investors—fuelled by low interest rates—were keen to take on the riskier bets for the chance of outsized returns. There were 679 SPAC IPOs globally in 2021 worth a combined US$172.2 billion, leaving hopeful merger targets like GoFor confident in their prospects for a big exit through one of the many well-funded blank-cheque firms. 

Another investor on GoFor’s board agreed that the EV strategy was ancillary to the primary focus on closing a SPAC merger. “That’s one category in the market, in my view, that has been relatively unscathed from a venture perspective. Maybe there was some hope that, if we have an EV fleet, we can command a premium in the market,” he said. 

GoFor announced a partnership with Gardner’s Royale EV in January 2021, which would allow GoFor drivers in California to lease electric trucks. By 2025, the company said, at least half of its fleet would be electric. 

Despite the announcement, the company never leased any EVs. “The plan has been delayed while the new private equity owners align on their forward strategy,” Gardner told The Logic. 

But the rebranding had become a key component of GoFor’s story. And with a slate of impressive new team members Gardner recruited—including former Deutsche Bank and BMW chief financial officer Stefan Krause as chairman and Daphne Huang, a seasoned finance executive for pharmaceutical and other publicly listed firms, as CFO—GoFor began meeting with SPACs in search of its golden ticket to the public market. 

A former board member who worked with GoFor through the SPAC process said there were about 20 companies interested in merging with the startup, drawn in by the company’s bench strength and business fundamentals. “Unlike a lot of these companies that went public with zero revenue, we actually had real revenue,” he said. 

GoFor zeroed in on what would be a two-step process to go public. First, it would merge with a legacy logistics company that the board member said had been in the business for about 20 years. Then, it would combine that new entity with a publicly listed SPAC. 

The estimated enterprise value of the new company would have been about US$750 million, the source said. 

But what the board and executive team didn’t realize while working on the deal was just how narrow the SPAC window would be. Mergers began slowing down in mid-2021, as it became clear that companies taken public through SPAC combinations were performing overwhelmingly poorly. Between 2018 and April 2022, firms that went public via SPAC had lost 47.8 per cent of their stock value, according to a Pitchbook analysis, while the S&P 500 had gained nearly 60 per cent over the same period. 

The slowing SPAC market was just the first sign that the delicate balance of conditions GoFor needed to realize its billion-dollar plan were crumbling. 

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What followed was a period of rapid turnover for GoFor. Towards the end of 2021—with Rollo’s health failing and Gardner at the helm—the company cut or replaced its top technology, finance and logistics executives, as well as its vice-presidents of product and customer services. 

Many GoFor investors, too, felt that the company had teased them with riches, only to snatch them away. 

McDonald and Gardner both attributed some of the frustration to the wrath of inexperienced investors that piled into startups during the pandemic without properly considering the risk associated with venture capital investing. 

“The boom-bust cycle, it’s been, invest in anything and you’re a genius,” said McDonald. “And all of a sudden, when that turns, the inexperienced folks are faced with, ‘How do I deal with an investment that went down?’” he said. “It’s a paper gain or loss, but the panic button sounds and now all everyone can see is fear, versus greed.” 

The company was still angling for its SPAC merger when Rollo’s health took a turn for the worse in late 2021. After more than a year-long battle with cancer, Rollo died that Christmas Eve, leaving behind his wife and two sons—and a company at the mercy of a fickle market.  

Before Rollo died, Gardner and McDonald said GoFor had put a contingency plan in place in the event they couldn’t complete a merger. An existing investor, who was also a board member, had committed to Rollo and the board that he would lead another funding round, extending the company’s runway and encouraging new investors to participate. 

But that investor reneged on the agreement, eroding confidence from other backers that the company could generate returns for them. 

GoFor still went back to the market to try and refill its coffers with a traditional Series B round, but investors had lost confidence. “If you have an inside investor who’s on the board, every other investor will assume that they have better information than they do, because they do,” McDonald said. “If that inside investor doesn’t invest, the signal is nearly deadly, if not deadly.”

At that point, in spring 2022, the venture capital market was shifting. Record deal activity driven by the frothy markets was giving way to investor caution, as shaky geopolitical conditions and rising inflation and interest rates rattled the economy. “At that point the cash was short enough in the company that it created a crisis,” said McDonald.

Arizona-based venture-debt investor Trinity Capital kicked in nearly US$10 million in early 2022. But the company continued to struggle. Within a quarter, the lender had written down the asset by about 60 per cent, Trinity’s financial disclosures show. 

The company began looking for a buyer to take over. One of its board members, Jennifer Hickman, happened to be a partner at 3Q—a private equity firm focused on buying out mid-sized, distressed companies—and the firm made a bid to acquire GoFor. 

Hickman recused herself from GoFor’s board, said McDonald, and the company entered into an agreement with 3Q. A source with access to the company’s performance metrics said the firm bought a majority stake in GoFor for between US$5 million and US$10 million—a far cry from the US$750 million the startup was pegged at months earlier. 

3Q did not respond to The Logic’s request for an interview and McDonald would not disclose terms of the buyout. One shareholder described their strategy as a last-mile delivery rollup: “Their goal is to use GoFor as the head acquisition, then go across the marketplace and they’re going to buy a whole bunch of other failed GoFors.” After packaging together the logistics companies and growing their combined revenue to, say $50 million or $100 million, said the source, 3Q would likely sell the entity to a larger private equity firm to operate it. 

Sources said they expect to see a swathe of logistics companies either fail or be snapped up by buyers like 3Q, as demand slows and venture funding that fuelled their early pandemic-era growth dwindles. GoFor’s competitors are certainly dealing with the same market conditions that thwarted the company’s ambitious plans. RenoRun, a Montreal-based building materials delivery startup, has since laid off the majority of its staff and entered creditor protection little more than a year after raising a $181-million Series B. The Logic reported last week that the company has been scrambling for a buyer and struggling to avoid bankruptcy after it failed to raise more money. And Toronto-based GoBolt laid off 55 workers—about 5 per cent of its staff—in January, after closing a $75-million raise a month earlier. 

McDonald said GoFor’s new strategy isn’t unlike its original plan—it’s just the playing field that has changed. The company still wants to consolidate power in the logistics business through merging with other players, and under 3Q, it may be able to do that. The CEO said GoFor is eyeing between five and 10 possible acquisition targets in Canada. “It’s on sale. That’s the attraction,” he said of the sector. 

“Being able to roll up struggling last-mile delivery firms and buy other distressed assets is certainly where we’re focused,” McDonald added. “We’re just navigating the changing access to the capital market as we go through it.”