Two twenty-somethings from Uganda and Ghana thought there was a fortune to be made in providing transnational financial services to 1.2 billion Africans. With 5 million users, San Francisco-based Chipper Cash is just getting started.
IIt was summer 2018 and Ham Serunjogi, a 24-year-old Ugandan immigrant, found his sales pitch at a Palo Alto venture capital firm was going well. He had explained how his fintech startup Chipper Cash would enable African consumers to send money across national borders cheaper and easier than the antiquated banking system – a kind of Venmo for the continent.
Then came a question from one of the partners, “Why aren’t you looking for donations and grants to fund this?” Because, Serunjogi replied, this will be a profitable Business. The unsuspecting partner insisted, “Why don’t you talk to Unicef or an impact investing firm?” Serunjogi discreetly refuses to name the firm or say which VC later told him that “regardless of the metrics , I have to apply a discount to this shop because it is in Africa”.
Those memories still sting, though Chipper Cash has now raised $300 million from a roster of blue-chip VCs, most recently in November at a $2.2 billion valuation. “Those were things I had to take seriously. But it was outrageous and it still is,” says Serunjogi, from the San Francisco office where he, co-founder Maijid Moujaled and nearly a fifth of the company’s 350 employees work. The two founders each have an estimated 10% stake in Chipper, which translates into paper fortunes in excess of $200 million.
Sheel Mohnot, a former partner at 500 Startups — Chipper Cash’s first backer — reports early investor resistance to ignorance about Africa. “No one was investing in Africa back then,” he says. That has changed. According to CB Insights, venture capitalists invested US$1.5 billion in African fintech companies last year, a sevenfold increase from 2020. Sub-Saharan Africans today have 605 million registered mobile money accounts – which allow them to send cash via text messages – up from 469 million in 2018 that makes the space fertile ground for more advanced consumer finance apps.
Four years after its inception, Chipper Cash has 5 million registered users in seven countries including Uganda, Ghana and Nigeria. Not only does it offer low-cost money transfers, but it also offers bill payment, crypto trading, and the ability to buy US stocks. Excluding crypto transactions, it posted revenue of more than $75 million in 2021, compared to $18 million in 2020.
The idea for Chipper Cash came about when high school-age Serunjogi saw the problems his father was encountering trying to move money through Africa’s congested banking system. Serunjogi’s family lived in Gayaza, a Ugandan town 10 miles outside the capital, Kampala. His parents owned a farm, and his father also ran an IT operation that helped local businesses build networks. Though barely wealthy, the family sent Serunjogi and his two brothers to a private high school and enrolled them in a competitive swimming club. In 2010, the then 16-year-old Serunjogi made it into the Uganda Youth Olympic Team. After struggling with a bank transfer, his father had to fly to South Africa with an envelope full of cash to pay for his son’s swimming coach while they trained there.
After high school, Serunjogi followed his older brother to Grinnell, a small liberal arts college in Iowa known for its strong academics, where both swam in varsity. It was at Grinnell that he met Moujaled, a Ghanaian computer science student who had started a popular undergraduate programming group. Almost immediately, the two started talking about developing an African money transfer app. But first they wanted technical experience in the real world and needed work visas. So Serunjogi emailed Mark Zuckerberg and Sheryl Sandberg during his junior year and landed an internship at Facebook that turned into a full-time job in Dublin after he graduated in 2016.
In the spring of 2018, Serunjogi Moujaled, who worked as a software engineer in San Francisco, texted that it was time to get started. Serunjogi quit his job and moved into Moujaled’s one-bedroom apartment, where he slept on an air mattress in the kitchenette. The two used their combined savings of less than $30,000 and Moujaled’s ongoing salary as seed capital. They launched a trial of their app in July 2018, allowing customers to send money from Uganda to Ghana for free.
They participated in more than 50 VC firms until November 2018 when 500 startups agreed to invest $150,000. Before the papers were signed, Mohnot wired Chipper $40,000 after Serunjogi told him he would miss the rent. “I’ll be eternally grateful to him for that,” says Serunjogi.
Chipper’s free, easy-to-use app was a big improvement over the alternatives available. For example, Kenya’s M-Pesa, launched in 2007, charges 1% to 2% for many domestic transfers.
By mid-2019, Chipper Cash was available in Uganda, Ghana, Kenya and Rwanda. It soon expanded into Nigeria, Africa’s largest market with more than 200 million people, and had 600,000 customers by the end of the year. It also introduced an exchange rate markup fee of 2% to 5% to start generating revenue. As bitcoin surged from $14,000 to $20,000 in the fall of 2020, Chipper began letting users buy and sell bitcoin and ether, establishing a second lucrative line of business: trading fees. It reached a $2.2 billion valuation at the end of 2021, with investments from the likes of Sam Bankman-Fried’s FTX, Ribbit Capital, and Bezos Expeditions. Transactions grew from $200 million in the first quarter of 2021 to $1.6 billion 12 months later.
All this growth comes with additional high-stakes challenges. One of them is liquidity: Chipper needs to ensure that there are enough funds in each country to support instant transfers. If this is not the case, transaction times can slow down to a full day or more. Money can solve this problem. A bigger concern is competition. Senegal-based startup Wave offers similar services (albeit in different countries so far) and was valued at $1.7 billion last year. Other remittance companies like Remitly and Wise don’t yet let people send money from one African country to another, but there’s nothing stopping them from entering the market.
For now, Serunjogi is focused on maintaining Chipper’s rapid growth, transitioning to profitability and helping Africans along the way. Clients benefit, he says, when they can move money easily and have new ways to invest and build wealth. “I firmly believe in the role of entrepreneurship and capitalism in improving the lives of people in developing countries.”