In a dramatic turn of events, Chipper Cash, a leading fintech startup in Africa, has seen its valuation plummet by over 70%, from a staggering $2.2 billion to a mere $500 million according to Forbes. This drastic drop in valuation is largely attributed to the failed acquisition talks with Zepz (formerly WorldRemit Group), a UK-based international money-transfer firm. The proposed deal, which would have valued Chipper between $250 million and $500 million, fell through due to complications in sharing financial data. This significant decrease in valuation has led to Chipper losing its status as an African tech unicorn.
Over the past ten months, the African tech landscape has been rife with reports of Chipper Cash’s struggles. Forbes recently shed light on the company’s trials and tribulations, based on interviews with Ham Serunjogi, the Co-Founder and CEO of Chipper Cash, former employees, and several individuals privy to the situation. The fintech startup has been grappling with a series of layoffs and strategic shifts, underscoring the challenges many fintech companies face in the rapidly changing African market.
The fintech startup, known for its low-cost money transfers, bill payments, stock investing, and crypto trading services, was hit hard by a series of headwinds. The company, which once boasted nearly 450 employees, initiated a series of layoffs in 2022, resulting in a 30% staff reduction. This came as a shock, considering Chipper’s history of aggressive expansion and strong financial performance.
Founded in 2018, Chipper Cash quickly amassed five million registered users across seven African countries in just four years. The startup reported revenues exceeding $75 million in 2021 and projected figures between $100 million and $150 million for 2022. However, the fintech sector underwent a sudden shift, with rising interest rates and a volatile stock market altering investor priorities. This, coupled with the collapse of FTX, one of Chipper’s backers, and a tumultuous crypto market, created a climate of uncertainty.
In response to these challenges, Chipper took decisive action. The company slashed its internal valuation by 70% and raised convertible debt to strengthen its business. Layoffs were carried out, and the startup reassessed its marketing strategies, leading to a temporary decrease in active users but demonstrating the company’s dedication to profitability.
Irene Mwoyogwona: Beyond the Numbers – How Pride Bank's Award-Winning CFO Combines Profitability and Social ImpactCEO Serunjogi, who had previously focused on rapid growth, recognized the need for a strategic shift towards balancing growth with fiscal responsibility. The company began offering USD-denominated accounts to African users and refocused on its core market, scaling back its international expansion efforts.
For Serunjogi, this period required a delicate balancing act between managing the emotional impact of layoffs and guiding the company towards more sustainable business practices. The company’s core values underwent a transformation, with “lead with empathy” being replaced by “be customer-obsessed,” indicating a shift towards a more results-oriented culture.
Despite these challenges, Serunjogi remains cautiously optimistic about Chipper’s future. The company’s journey serves as a stark reminder of the delicate balance fintech startups must strike as they navigate the ever-changing landscape, balancing the pursuit of growth with the realities of financial sustainability.
