By Jeph Ajobaju, Chief Copy Editor
Chipper Cash, a fintech cofounded in America by a Ugandan and a Ghanaian, has just raised $100 million in a Series C round, bringing its total purse to $143.8 million within a year, and raising its profile to the most valuable startup in Africa.
Chipper Cash was founded in San Francisco in 2018 by Ham Serunjogi from Uganda and Maijid Moujaled from Ghana. It offers mobile-based, no fee, P2P payment services in Nigeria, Kenya, Uganda, Tanzania, Rwanda, Ghana, and South Africa.
Last November, the firm raised $30 million in a Series B funding round led by Ribbit Capital with the participation of Bezos Expeditions, a venture capital fund floated by Jeff Bezos, the world’s richest man.
TechCrunch reports that this was after closing a $13.8 million Series A round from Deciens Capital and other investors in June 2020. Chipper Cash has gone through three rounds totalling $143.8 million in a year.
However, when the $8.4 million raised in two seed rounds back in 2019 is added, this amount increases to $152.2 million.
SVB Capital, the investment arm of US high-tech commercial bank, Silicon Valley Bank, led this Series C round.
Existing investors – Deciens Capital, Ribbit Capital, Bezos Expeditions, One Way Ventures, 500 Startups, Tribe Capital, and Brue2 Ventures – also participated.
Serunjogi and Moujaled met in Iowa after coming to the US for studies. Following their stints at big names like Facebook, Flickr and Yahoo!, they decided to work on their own startup.
Signs of growth
Chipper Cash has expanded to a new territory outside Africa. “We’ve expanded to the UK, it’s the first market we’ve expanded to outside Africa,” CEO Serunjogi told TechCrunch.
The company boasts more than 200 employees and plans to increase its workforce by hiring 100 staff throughout the year.
The number of users on Chipper Cash has increased to four million, up 33 per cent from last year.
The company averaged 80,000 transactions daily in November 2020 and processed $100 million in payments value in June 2020, but Serunjogi declined to comment on current figures, including revenue.
When TechCrunch reported its Series B last year, Chipper Cash wanted to offer more business payment solutions, cryptocurrency trading options, and investment services.
So what has been the progress since then? “We’ve launched cards products in Nigeria and we’ve also launched our crypto product. We’re also launching our US stocks product in Uganda, Nigeria and a few other countries soon,” Serunjogi said.
Crypto is widely adopted in Africa where users are responsible for a sizeable chunk of transactions that take place on some global crypto-trading platforms.
African users account for $7 billion of the $8.3 billion in Luno’s total trading volume. Binance P2P users in Africa grew 2,000 per cent in the past five months while their volumes increased by over 380 per cent.
Individuals and small businesses across Nigeria, South Africa and Kenya account for most of the crypto activity on the continent. Chipper Cash is active in these countries and tapping into this opportunity is basically a no brainer.
“Our approach to growing products and adding products is based on what our users find valuable,” Serunjogi explained.
“As you can imagine, crypto is one technology that has been widely adopted in Africa and many emerging markets. So we want to give them the power to access crypto and to be able to buy, hold, and sell crypto whenever.”
However, its crypto service isn’t available in Nigeria, the largest crypto market in Africa, because the Central Bank of Nigeria (CBN) prohibits users from converting fiat into crypto from their bank accounts.
To survive, most crypto players have adopted P2P methods but Chipper Cash isn’t offering that yet and, Serunjogi told TechCrunch that Chipper Cash is “looking forward to any development in Nigeria that allows it to be offered freely again.”
The same goes for the investment service Chipper Cash plans to roll out in Nigeria and Uganda soon.
Nigeria’s capital market regulator, the Security and Exchange Commission (SEC), is keeping tabs on local investment platforms and bringing their activities under its purview.
Chipper Cash will not be exempt when the product is live in Africa’s biggest economy and has begun engaging regulators to be ahead of the curve.
“As fintech explodes and as innovation continues to move forward, consumers have to be protected. We invest millions of dollars every year in our compliance programs, so I think working closely with the regulators directly so that these products are offered in a compliant manner is important,” Serunjogi added.
African fintech unicorns
Serunjogi made some remarks about the CBN which resemble comments made by Flutterwave CEO Olugbenga Agboola back in March.
He acknowledged the central banks in Kenya, Rwanda, Uganda for creating environments where innovation can thrive.
Then he said: “Nigeria has probably the most exciting and vibrant tech ecosystem in Africa. And that’s credit directly to the CBN for creating and fostering an environment that allowed multiple startups like ourselves and others like Flutterwave to blossom.”
Most fintechs would argue that the CBN stifles innovation but comments from both CEOs seem to suggest otherwise.
From all indications, Chipper Cash and Flutterwave strive to be on the right side of a country’s apex bank policies and regulations. It is why they are one of the fastest-growing fintechs in the region and also billion-dollar companies.
Serunjogi insisted, however, that “obviously, we’re not getting into our valuation, but we’re probably the most valuable private startup in Africa today after this round.
“So that’s a reflection of the environment that regulators like the CBN have created to allowed innovation and growth.”
Importance of solid balance sheet
Up until last week, the only private unicorn startup in Africa this year was Flutterwave. Then China-backed and African-focused fintech, OPay, came along as it was reported to be in the process of raising $400 million at a $1.5 billion valuation.
If Serunjogi’s comment is anything to go by, Chipper Cash may currently be valued between $1 and $2 billion, thus joining the exclusive billion-dollar club.
His words: “We’re not commenting on the size of our valuation publicly. One of the things that I’ve been quite keen on internally and externally is that the valuation of our company has not been a focus for us.
“It’s not a goal we’re aspiring to achieve. For us, the thing that drives us is that we have a product that is impactful to our users.”
Serunjogi said the latest investment actualises the importance of possessing a solid balance sheet and onboarding SVB Capital and getting existing investors to double down is a means to that end.
According to him, a strong balance sheet will provide the infrastructure needed to support key long-term investments which will translate to more exciting products down the road.
“We look at our investors as key partners to the business. So having very strong partners around the table makes us a stronger company. These are partners who can put capital into our business, and we’re also able to learn from them in several other ways.”
Just like Ribbit Capital and Bezos Expeditions in last year’s Series B, this is SVB Capital’s first foray into the African market.
SVB Capital Managing Director Tilli Bannett confirmed in an email the investment in Chipper Cash.
She said the firm invested in Chipper Cash because it has created an easy and accessible way for people in Africa to fulfil their financial needs through enhanced products and user experiences.
“As a result, Chipper has had a phenomenal trajectory of consumer adoption and volume through the product. We are excited at the role Chipper has forged for itself in fostering financial inclusion across Africa and the vast potential that still lies ahead,” she added.
Bright spot in African tech investment
Fintech remains the bright spot in African tech investment, accounting for more than 25 per cent of about $1.5 billion raised by African startups in 2020.
This figure will likely increase this year as four startups have raised $100 million already – TymeBank in February, Flutterwave (March), OPay (May), and Chipper Cash (May).
All except TymeBank are valued at over $1 billion, and it is the first time Africa has witnessed two or more billion-dollar companies in a year.
Besides Jumia (e-commerce), Interswitch (fintech), and Fawry (fintech), the continent now has six billion-dollar tech firms.
And the timeframe at which startups are reaching this landmark is shortening. It took Interswitch 17 years, Fawry (13 years); but it took Flutterwave five years, Jumia (four years), OPay (three years), and Chipper Cash (three years).