Home Technology FTX lowered Chipper Cash’s valuation from $2 billion to $1.25 billion businessroundups.org

FTX lowered Chipper Cash’s valuation from $2 billion to $1.25 billion businessroundups.org

by Ana Lopez
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African fintech Chipper Cash saw its valuation fall from $2 billion to $1.25 billion before FTX’s bankruptcy, according to documents shared by the Financial Times on Alameda’s venture capital portfolio.

businessroundups.org got a whiff of this information from sources familiar with the company’s financial situation, and while the African cross-border payment company did not confirm the news when asked, the documents corroborate the details from our sources. The news comes a day after Chipper Cash laid off 12.5% ​​of its workforce (about 50 employees).

Last May, Chipper Cash raised a $100 million Series C round led by SVB Capital, the investment arm of US high-tech commercial bank Silicon Valley Bank. Six months later, it received another $150 million, an extension of that round in which Chipper Cash raised a total of $250 million. Sam Bankman-Fried’s now-defunct cryptocurrency exchange platform FTX led the round, and Chipper Cash’s valuation skyrocketed to $2 billion, becoming one of Africa’s five unicorns last year.

FTX funded more than a quarter of Chipper Cash’s renewal round, for $40 million, according to the documents revealing Alameda and FTX’s bets. Despite raising over $250 million in 2021, Chipper Cash, who counts afrobeats, starred Burn boy and French former professional footballer Patrice Evr as celebrity endorsers, took to the market this year to raise more money, most likely as a buffer to weather the current macroeconomic situation. But like many startups this year, it may have had to settle for a down round. It’s unclear how much the four-year-old startup managed to raise new funding, but the documents show that Chipper Cash received another $35 million in SAFE from FTX at a valuation of $1.25 billion. The new valuation, which will take full effect later in a pricing round, represents a 37.5% drop from the valuation Chipper Cash imposed months ago.

A protracted bull run in which public technology stocks and private investment boomed for a decade has slowed, heralding a new wave of job and cost cuts. It’s in stark contrast to last year’s bubbling fundraising environment, where startups moved quickly to hire and raise money. Many are now struggling to prove and maintain the high-flying valuations they have achieved as the pendulum has swung back from a founder market to an investor market.

Several startup valuations, especially those of fintechs, have dropped spectacularly this year, with juggernauts like Stripe and Klarna taking serious valuation discounts by as much as 28% and 85% respectively. When businessroundups.org reported the Chipper Cash layoffs yesterday, we noted that some high-profile startups in Africa had lowered valuations internally, just like their global counterparts. Similar to Chipper Cash, there are reports of secondary sales of startup stocks falling between 20% and 60%, lowering their 409A valuation (an independent estimate of a startup’s fair market value, often used to distribute stock options to employees). to praise).

Smaller African startups are also not exempt from this valuation routine. For example, the valuation of Egyptian social commerce platform Brimore was down by as much as 50%, according to sources familiar with the company’s financials. In October, we reported on Nigerian genomics startup 54gene, which not only saw its valuation cut from $170 million to $50 million, but also closed its down round with investors requesting a 4x liquidation preference.

It is not clear whether Chipper Cash will maintain this rating in the next round of awards, as lead investor FTX is currently bankrupt. According to FT, the four-year-old fintech was one of more than 450 investments that Sam Bankman-Fried wanted to put up as collateral in an effort to raise money for the FTX group, which includes 10 holding companies such as Alameda Research, FTX Ventures, FTX Trading, Maclaurin Investments and Clifton Bay Investments (the branch used to invest in Chipper Cash.)

Other African startups on the list are: OVEX, a South African digital asset exchange and OTC trading desk ($5 million from FTX at a valuation of $122 million); Kenya based payment automation and settlement company AZA Finance ($25 million promissory note/loan); African Mobile Money Unicorn Wave ($10 million in equity); South African crypto exchange platform VALR ($4 million equity); Nigerian crypto exchange startup Bitnob ($500,000 from FTX at a $20 million valuation); Nestcoin, a Nigerian web3 platform whose assets were tied up on SBF’s bankrupt crypto exchange platform ($250,000 FTX equity at a $30 million valuation), and Congo-based web3 startup Jambo ($500,000 in tokens).

It has been rumored that some of the FTX and Alameda portfolio companies have not received the full amount of investment reported in the financials due to FTX’s insolvency. If Chipper Cash falls into that category, it’s not hard to see why it laid off staff to keep the runway, given that the company claims not to have been exposed to the collapse of FTX, according to two people familiar with the handling of the company with the bankrupt stock exchange.

Chipper Cash was founded in 2018 to provide a free peer-to-peer cross-border payment service for Africans. According to the company, the platform is used by more than 5 million customers in Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya – and more recently in the US and UK, where the FTX-backed startup expanded this year to peer-to-peer money transfers from both countries to selected regions in Africa. Last month, the African app for cross-border payments announced that it did Acquire Zambian fintech company Zoona in an effort to expand into the South African country.

The platform, which offers P2P transactions, crypto, stocks and virtual cards, has seen its gross revenue increase 21x from $8 million in Q1 2021 to approximately $169 million in Q1 2022 and its TPV has increased 8x from $213 million to $1.65 billion in the same quarters, according to businessroundups.org financials.

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