African fintech Chipper Money noticed its valuation slashed from $2 billion to $1.25 billion earlier than FTX’s chapter, in response to paperwork shared by the Monetary Instances on Alameda’s enterprise capital portfolio.
TechCrunch obtained a whiff of this info from sources acquainted with the corporate’s monetary state of affairs, and although the African cross-border funds firm didn’t verify the information when requested, the filings validate our sources’ particulars. The information is coming to mild a day after Chipper Money laid off 12.5% of its workforce (about 50 staff).
Final Could, Chipper Money raised a $100 million Collection C spherical led by SVB Capital, the funding arm of U.S. high-tech industrial financial institution Silicon Valley Financial institution. Six months later, it obtained one other $150 million, an extension of that spherical that noticed Chipper Money elevate a complete of $250 million. Sam Bankman-Fried’s now-defunct cryptocurrency trade platform FTX led the spherical and Chipper Money’s valuation skyrocketed to $2 billion, turning into one in every of Africa’s 5 unicorns final 12 months.
FTX financed greater than 1 / 4 of Chipper Money’s extension spherical, at $40 million, in response to the paperwork revealing Alameda’s and FTX’s bets. Regardless of elevating over $250 million in 2021, Chipper Money, which counts Afrobeats star Burna Boy and French former skilled soccer participant Patrice Evra as movie star endorsers, went into the market this 12 months to lift more cash, most definitely as a cushion to climate the present macroeconomic state of affairs. However as with many startups this 12 months, it might have needed to settle with a down spherical. It’s unclear how a lot the four-year-old startup managed to lift in contemporary funding however the paperwork present that Chipper Money obtained a further $35 million in SAFE from FTX at a $1.25 billion valuation. The brand new valuation, which can come into full impact in a priced spherical later, represents a 37.5% drop from the valuation Chipper Money commanded months in the past.
A protracted bull run that noticed public tech shares and personal investments growth over a decade has slowed down, ushering in a brand new wave of job and value cuts. It’s a stark distinction to final 12 months’s mouthwatering fundraising surroundings the place startups moved quick to rent and lift cash. Many are actually struggling to show and keep the high-flying valuations they attained because the pendulum has swung again from a founder’s market to an investor’s market.
A number of startup valuations, significantly these of fintechs, have fallen spectacularly this 12 months, with juggernauts reminiscent of Stripe and Klarna taking critical valuation haircuts by as a lot as 28% and 85%, respectively. When TechCrunch reported Chipper Money’s layoffs yesterday, we famous that some high-profile startups in Africa had slashed valuations internally similar to their international counterparts. As with Chipper Money, there have been stories relating to secondary gross sales of startups’ shares falling between 20% and 60%, thus reducing their 409A valuation (an unbiased estimate of a startup’s honest market worth, usually used to cost inventory choices to staff).
Smaller African startups will not be exempt from this valuation rout, both. For example, Egyptian social commerce platform Brimore had its valuation slashed by as a lot as 50% in response to sources acquainted with the corporate’s financials. In October, we reported on Nigerian genomics startup 54gene, which not solely noticed its valuation trimmed from $170 million to $50 million but additionally closed the down spherical with buyers requesting a 4x liquidation choice.
It’s not clear if Chipper Money will keep this valuation in its subsequent priced spherical seeing as its lead investor FTX is at present bankrupt. In accordance with FT, the four-year-old fintech was one in every of over 450 investments Sam Bankman-Fried wished to supply as collateral in an try to lift cash for the FTX group, which incorporates 10 holding corporations reminiscent of Alameda Analysis, FTX Ventures, FTX Buying and selling, Maclaurin Investments and Clifton Bay Investments (the arm used to spend money on Chipper Money.)
Different African startups on the checklist embrace: OVEX, a South African digital asset trade and OTC buying and selling desk ($5 million from FTX at a $122 million valuation); Kenya-based cost automation and settlement firm AZA Finance ($25 million promissory observe/mortgage); African cellular cash unicorn Wave ($10 million in fairness); South African crypto trade platform VALR ($4 million fairness); Nigerian crypto trade startup Bitnob ($500,000 from FTX at a $20 million valuation); Nestcoin, a Nigerian web3 platform whose property obtained caught on SBF’s bankrupt crypto trade platform ($250,000 fairness from FTX at a $30 million valuation), and Congolese-based web3 startup Jambo ($500,000 in tokens).
There have been whispers that a few of FTX’s and Alameda’s portfolio corporations didn’t obtain the total quantity of investments said within the financials on account of FTX’s insolvency. If Chipper Money falls into that class, it’s not onerous to see why it might have laid off workers with a purpose to protect runway as the corporate claims to not have been uncovered to FTX’s collapse, in response to two individuals acquainted with the corporate’s dealings with the bankrupt trade.
Chipper Money was based in 2018 to supply a no-fee peer-to-peer cross-border cost service for Africans. In accordance with the corporate, its platform is utilized by over 5 million clients throughout Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya — and extra not too long ago, the U.S. and U.Ok the place the FTX-backed startup expanded this 12 months to facilitate peer-to-peer cash motion from each international locations to pick out areas in Africa. Final month, the African cross-border cost app introduced that it could purchase Zambian fintech firm Zoona in a bid to increase into the Southern African nation.
The platform, which affords P2P transactions, crypto, shares and digital playing cards, has seen its gross income rise 21x from $8 million in Q1 2021 to about $169 million in Q1 2022 and its TPV enhance 8x from $213 million to $1.65 billion inside the similar quarters, in response to financials seen by TechCrunch.