African unicorn, Chipper Cash, saw its valuation slashed from $2bn to $1.25bn before the FTX bankruptcy according to documents shared by the Financial Times on 6th December 2022. These documents were about the venture capital portfolio of Alameda Research, a cryptocurrency trading firm cofounded in September 2017 by Sam Bankman-Fried, the founder of FTX. This news caps a tumultuous week for the startup having laid off 12.5% (about 50) of its employees just a day earlier.
Chipper Cash is one of the most prominent startups in the African startup ecosystem becoming a unicorn in 2021. Founded in 2016 by Ham Serunjogi and Majeed Moujaled, a Ghanaian in San Francisco, the startup now operates in multiple African markets with a core presence in Nigeria, Kenya, Nigeria, Uganda, Rwanda, South Africa, and Ghana. Chipper Cash enables its users to transfer money across borders in Africa as easily as sending a text. In 2021, it introduced fractional investing in US stocks for all its users as well as crypto trading.
Previously, Chipper Cash had raised $302m across 6 funding rounds including a $150m series C extension round in November 2021 led by FTX with participation from investors like Silicon Valley Bank, Deciens Capital, Bezos Expeditions, Ribbit Capital, One Way Ventures and Tribe Capital.
As per the documents, Chipper Cash raised $35m in SAFE (Simple Agreement for Future Equity) in 2022 at a valuation of less than 37.5% of its peak of $2bn. But raising at a smaller valuation in 2022 is not a reserve for Chipper Cash alone. 2022 has proven to be a difficult year for startups. Prominent fintechs like Klarna and Stripe have seen their valuations decline as the funding winter ravages the global startup ecosystem forcing startups to settle for down rounds. Klarna. For example, raised a funding round in July 2022 that saw its valuation drop from $46bn to $6.7bn while Stripe lowered its valuation internally by 28% to $74bn.
Other than settling for down rounds, startups have also laid off employees in cost-cutting measures. As per Inc 42, Indian startups have laid off almost 18,000 employees in 2022 while Crunchbase tally puts the number of laid-off employees at 88,000 in the USA this year. In Africa, startups like Wave Mobile Money, 54Gene, Sendy, Safeboda, and Moove among others have all laid off employees. Major startup backers like Y Combinator, and Sequoia Capital issued a warning to their portfolio startups to cut costs and improve their runway.
Cover Photo/Chipper Cash
The writer is a retired founder, and now Editor-in-Chief at Digest Africa. You can reach him at +256771162922 or firstname.lastname@example.org
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