Fintech in Africa is a goldmine. Investors are betting huge on startups providing a plethora of providers from funds and lending to neobanks, remittances and cross-border transfers, and rightfully so. Each of those providers solves distinctive units of challenges. For cross-border funds, it’s the outrageous charges and regulatory hassles concerned with finishing transactions from one African nation to a different.
Chipper Cash, a three-year-old startup that facilitates cross-border cost throughout Africa, has closed a $100 million Series C spherical to introduce extra merchandise and develop its crew.
It hasn’t been too way back since Chipper Cash was final within the information. In November 2020, the African cross-border fintech startup raised $30 million Series B led by Ribbit Capital and Jeff Bezos fund Bezos Expeditions. This was after closing a $13.8 million Series A round from Deciens Capital and different buyers in June 2020. Hence, Chipper Cash has gone by means of three rounds totalling $143.8 million in a yr. However, when the $8.4 million raised in two seed rounds again in 2019 is included, this quantity will increase to $152.2 million.
SVB Capital, the investment arm of U.S. high-tech business financial institution Silicon Valley Bank led this Series C spherical. Others who participated on this spherical embrace current buyers — Deciens Capital, Ribbit Capital, Bezos Expeditions, One Way Ventures, 500 Startups, Tribe Capital, and Brue2 Ventures.
Chipper Cash was launched in 2018 by Ham Serunjogi and Maijid Moujaled. The pair met in Iowa after coming to the U.S. for research. Following their stints at huge names like Facebook, Flickr and Yahoo!, the founders determined to work on their very own startup.
Last yr, the corporate which gives mobile-based, no price, P2P cost providers, was current in seven international locations: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya. Now, it has expanded to a brand new territory exterior Africa. “We’ve expanded to the U.K., it’s the first market we’ve expanded to outside Africa,” CEO Serunjogi mentioned to TechCrunch.
In addition and as an indication of development, the corporate which boasts greater than 200 workers plans to extend its workforce by hiring 100 workers all year long. The variety of customers on Chipper Cash has elevated to 4 million, up 33% from final yr. And while the corporate averaged 80,000 transactions each day in November 2020 and processed $100 million in funds worth in June 2020, it’s unclear what these figures are actually as Serunjogi declined to touch upon them, together with its revenues.
When we reported its Series B final yr, Chipper Cash needed to supply extra enterprise cost options, cryptocurrency buying and selling choices, and investment providers. 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 answered.
Crypto is broadly adopted in Africa. African customers are chargeable for a sizeable chunk of transactions that happen on some international crypto-trading platforms. For occasion, African customers accounted for $7 billion of the $8.3 billion in Luno’s total trading volume. Binance P2P customers in Africa additionally grew 2,000% inside the previous 5 months whereas their volumes elevated by over 380%.
Individuals and small companies throughout Nigeria, South Africa and Kenya account for a lot of the crypto exercise on the continent. Chipper Cash is energetic in these international locations and tapping into this opportunity is mainly a no brainer. “Our approach to growing products and adding products is based on what our users find valuable. 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,” the CEO added.
However, its crypto service isn’t obtainable in Nigeria, the biggest crypto market in Africa. The cause behind that is the Central Bank of Nigeria’s (CBN) regulation on crypto actions within the nation prohibiting customers from changing fiat into crypto from their financial institution accounts. To survive, most crypto gamers have adopted P2P strategies however Chipper Cash isn’t providing that but and in response to Serunjogi, the corporate is “looking forward to any development in Nigeria that allows it to be offered freely again.”
The identical goes for the investment service Chipper Cash plans to roll out in Nigeria and Uganda quickly. Presently, Nigeria’s capital market regulator SEC is keeping tabs on local investment platforms and bringing their actions beneath its purview. Chipper Cash won’t be exempt when the product is dwell in Nigeria and has begun partaking regulators to be forward 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 famous.
Six billion-dollar firms in Africa; the fifth fintech unicorn?
During our name, Serunjogi made some remarks about Nigeria’s central financial institution which resembles feedback made by Flutterwave CEO Olugbenga Agboola again in March.
While acknowledging the central banks in Kenya, Rwanda, Uganda for creating environments the place innovation can thrive, he mentioned: “Nigeria has probably the most exciting and vibrant tech ecosystem in Africa. And that’s credit directly to 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 however feedback from each CEOs appears to recommend in any other case. From all indication, Chipper Cash and Flutterwave attempt to be on the correct facet of the nation’s apex financial institution insurance policies and rules. It is why they’re one of many fastest-growing fintechs within the area and likewise billion-dollar firms.
“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 CBN have created to allowed innovation and growth,” Serunjogi commented when requested in regards to the firm’s valuation.
Up till final week, the one personal unicorn startup in Africa this yr was Flutterwave. Then China-backed and African-focused fintech OPay got here alongside as the corporate was reported to be within the technique of raising $400 million at a $1.5 billion valuation. If Serunjogi’s remark is something to go by, Chipper Cash would possibly presently be valued between $1-2 billion thus becoming a member of the unique billion-dollar membership.
But to make certain, I requested Serunjogi once more if the corporate is certainly a unicorn. This time, he gave a extra cryptic reply. “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 added that this investment actualizes the significance of possessing a stable stability sheet and onboarding SVB Capital and getting current buyers to double down is a method to that finish. According to him, a powerful stability sheet will present the infrastructure wanted to help key long-term investments which is able to translate to extra thrilling merchandise down the highway.
“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,” he mentioned of the buyers backing the three-year-old firm.
Just like Ribbit Capital and Bezos Expeditions in final yr’s Series B, that is SVB Capital’s first foray into the African market. In an electronic mail, the managing director of SVB Capital Tilli Bannett, confirmed the fund’s investment in Chipper Cash. According to her, the VC agency invested in Chipper Cash as a result of it has created a simple and accessible method for folks dwelling in Africa to fulfil their monetary wants by means of enhanced merchandise and person 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.
Fintech stays the brilliant spot in African tech investment. In 2020, the sector accounted for greater than 25% of the just about $1.5 billion raised by African startups. This determine will probably enhance this yr as 4 startups have raised $100 million rounds already: TymeBank in February, Flutterwave in March, and OPay and Chipper Cash this May. All besides TymeBank are actually valued at over $1 billion, and it turns into the primary time Africa has witnessed two or extra billion-dollar firms in a yr. In addition to Jumia (e-commerce), Interswitch (fintech), and Fawry (fintech), the continent now has six billion-dollar tech firms.
Here’s one other attention-grabbing piece of information. The timeframe at which startups are reaching this landmark appears to be shortening. While it took Interswitch and Fawry seventeen and 13 years respectively, it took Flutterwave 5 years; Jumia, 4 years; then OPay and Chipper Cash three years.
We reached out to the VC agency for remark relating to Chipper Cash’s valuation.