Tech in Africa

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African payment startup Chipper Cash raises $13.8M Series A

African cross-border fintech startup Chipper Cash has closed a $13.8 million Series A funding round led by Deciens Capital and plans to hire 30 new staff globally.

The raise caps an event filled run for the San Francisco based payments company, founded two years ago by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled.

The two came to America for academics, met in Iowa while studying at Grinnell College and ventured out to Silicon Valley for stints in big tech: Facebook for Serunjogi and Flickr and Yahoo! for Moujaled.

The startup call beckoned and after launching Chipper Cash in 2018, the duo convinced 500 Startups and and Liquid 2 Ventures — co-founded by American football legend Joe Montana — to back their company with seed funds.

Two years and $22 million in total capital raised later, Chipper Cash offers its mobile-based, no fee, P2P payment services in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya.

“We’re now at over one and a half million users and doing over a $100 million dollars a month in volume,” Serunjogi told TechCrunch on a call.

Chipper Cash does not release audited financial data, but does share internal performance accounting with investors. Deciens Capital and Raptor Group co-led the startup’s Series A financing, with repeat support from 500 Startups and Liquid 2 Ventures .

Deciens Capital founder Dan Kimmerling confirmed the fund’s lead on the investment and review of Chipper Cash’s payment value and volume metrics.

Parallel to its P2P app, the startup also runs Chipper Checkout: a merchant-focused, fee-based mobile payment product that generates the revenue to support Chipper Cash’s free mobile-money business.

The company will use its latest round to hire up to 30 people across operations in San Francisco, Lagos, London, Nairobi and New York — according to Serunjogi.

Image Credits: Chipper Cash

Chipper Cash has already brought on a new compliance officer, Lisa Dawson, whose background includes stints with the U.S. Department of Treasury’s Financial Crimes Enforcement Network and Citigroup’s anti-money laundering department.

“You know in the world we live in the AML side is very important so it’s an area that we want to invest in from the get go,” said Serunjogi.

He confirmed Dawson’s role aligned with getting Chipper Cash ready to meet regulatory requirements for new markets, but declined to name specific countries.

With the round announcement, Chipper Cash also revealed a corporate social responsibility component to its business. Related to current U.S. events, the startup has formed the Chipper Fund for Black Lives.

“We’ve been huge beneficiaries of the generosity and openness of this country and its entrepreneurial spirit,” explained Serunjogi. “But growing up in Africa, we’ve were able to navigate [the U.S.] without the traumas and baggage our African American friends have gone through living in America.”

The Chipper Fund for Black Lives will give 5 to 10 grants of $5,000 to $10,000. “The plan is to give that to…people or causes who are furthering social justice reforms,” said Serunjogi.

In Africa, Chipper Cash has placed itself in the continent’s major digital payments markets. As a sector, fintech has become Africa’s highest funded tech space, receiving the bulk of an estimated $2 billion in VC that went to startups in 2019.

Africa Top VC Markets 2019

Image Credits: TechCrunch

Those ventures, and a number of the continent’s established banks, are in a race to build market share through financial inclusion.

By several estimates — including The Global Findex Database — the continent is home to the largest percentage of the world’s unbanked population, with a sizable number of underbanked consumers and SMEs.

Increasingly, Nigeria has become the most significant fintech market in Africa, with the continent’s largest economy and population of 200 million.

Chipper Cash expanded there in 2019 and faces competition from a number of players, including local payments venture Paga. More recently, outside entrants have jumped into Nigeria’s fintech scene.

In 2019, Chinese investors put $220 million into OPay (owned by Opera) and PalmPay — two fledgling startups with plans to scale first in West Africa and then the broader continent.

Over the next several years, expect to see market events — such as fails, acquisitions, or IPOs — determine how well funded fintech startups, including Chipper Cash, fare in Africa’s fintech arena.

Jumia adapts Pan-African e-commerce network in response to COVID-19

Pan-African e-commerce company Jumia is adapting its digital retail network to curb the spread of COVID-19.

The Nigeria headquartered operation — with online goods and services verticals in 11 African countries — announced a series of measures on Friday. Jumia will donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa.

The company has offered African governments use of of its last mile delivery network for distribution of supplies to healthcare facilities and workers. Jumia will also reduce fees on its JumiaPay finance product to encourage digital payments over cash, which can be a conduit for the spread of coronavirus.

Governments in Jumia’s operating countries have started to engage the private sector on a possible COVID-19 outbreak on the continent, according to Jumia CEO Sacha Poignonnec .

“I don’t have a crystal ball and no one knows what’s gonna happen,” he told TechCrunch on a call. But in the event the virus spreads rapidly on the continent, Jumia is reviewing additional assets it can offer the public sector. “If governments find it helpful we’re willing to do it,” Poignonnec said.

Africa’s COVID-19 cases by country were in the single digits until recently, but those numbers spiked last week leading the World Health Organization to sound an alarm. “About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference Thursday. “It’s has been an extremely rapid…evolution.” 

By the World Health Organization’s latest stats Monday there were 1321 COVID-19 cases in Africa and 34 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.

Dr. Moeti noted that many socioeconomic factors in Africa — from housing to access to running water — make common measures to curb COVID-19, such as social-distancing or frequent hand washing, challenging. She went on to explain that the World Health Organization is looking for solutions that are adoptable to Africa’s circumstances, including working with partners and governments to get sanitizing materials to hospitals and families.

As coronavirus cases and related deaths grow, governments in Africa are responding. South Africa, which has the second highest COVID-19 numbers on the continent, declared a national disaster last week, banned public gatherings and announced travel restrictions on the U.S.

Kenya has imposed its own travel and crowd restrictions and the country’s President Uhuru Kenyatta urged citizens and businesses to opt for digital-payments as a safer means for transactions.

Across Africa’s tech ecosystem — which has seen significant growth in startups and now receives $2 billion in VC annually — a number of actors are stepping up.

Jumia Nigeria Fleet

Image Credit: Jumia

In addition to offering its logistics and supply-chain network, Jumia is collaborating with health ministries in several countries to use its website and mobile platforms to share COVID-19 related public service messages.

Heeding President Kenyatta’s call, last week Kenya’s largest telecom Safaricom waived fees on its M-Pesa mobile-money product (with over 20 million users) to increase digital payments use and lower the risk of spreading the COVID-19 through handling of cash.

Africa’s largest innovation incubator CcHub announced funding and a call for tech projects aimed at reducing COVID-19 and its social and economic impact.

A looming question for Africa’s tech scene is how startups in major markets such as Nigeria, Kenya and South Africa will weather major drops in revenue that could occur from a wider coronavirus outbreak.

Jumia is well capitalized, after going public in a 2019 IPO on the New York stock exchange, but still has losses exceeding its 2019 revenue of €160 million.

On managing business through a possible COVID-19 Africa downturn, “We’re very long-term oriented so it’s about doing what’s right with the governments and thinking about how we can help,” said Jumia’s CEO Sacha Poignonnec.

“Revenue wise, it’s really to early to tell. We do believe that e-commerce in Africa is a trend that goes beyond this particular situation.”

AWS partners with Kenya’s Safaricom on cloud and consulting services

Amazon Web Services has entered a partnership with Safaricom — Kenya’s largest telco, ISP and mobile payment provider — in a collaboration that could spell competition between American cloud providers in Africa.

In a statement to TechCrunch, the East African company framed the arrangement as a “strategic agreement” whereby Safaricom will sell AWS services (primarily cloud) to its East Africa customer network.

Safaricom — whose products include the famed M-Pesa mobile money product — will also become the first Advanced Consulting Partner for the AWS partner network in East Africa.

“The APN is…the program for technology…businesses who leverage AWS to build solutions and services for customers…and sell their AWS offerings by providing valuable business, technical, and marketing support,” Safaricom said.

“We chose to partner with AWS because it offers customers the broadest and deepest cloud platform…This agreement will allow us to accelerate our efforts to enable digital transformation in Kenya,” said Safaricom CEO Michael Joseph.

“Safaricom will be able to offer AWS services to East-African customers, allowing businesses of all sizes to quickly get started on AWS cloud,” the company statement continued.

For now, the information provided by Safaricom is a bit sparse on the why and how of the partnership between the American company and East African mobile, financial and ISP provider.

TechCrunch has an inquiry into Amazon and some additional questions posed to Safaricom, toward additional coverage.

An initial what-this-all-means take on the partnership points to an emerging competition between American cloud service providers to scale in Africa by leveraging networks of local partners.

The most obvious rival to the AWS-Safaricom strategic agreement is the Microsoft -Liquid Telecom collaboration. Since 2017, MS has partnered with the Southern African digital infrastructure company to grow Microsoft’s AWS competitor product — Azure — and offer cloud services to the continent’s startups and established businesses.

MS and Liquid Telecom have focused heavily on the continent’s young tech companies. “We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s  Head of Innovation Partnerships Oswald Jumira told TechCrunch in 2018.

Amazon hasn’t gone fully live yet with e-commerce services in Africa, but it has aggressively positioned AWS and built a regional client list that includes startups — such as fintech venture Jumo — and large organizations, such Absa and Standard Bank.

Partnering with Safaricom plugs AWS into the network of one East Africa’s most prominent digital companies.

Safaricom, led primarily by its M-Pesa mobile money product, holds remarkable dominance in Kenya, Africa’s 6th largest economy. M-Pesa has 20.5 million customers across a network of 176,000 agents and generates around one-fourth ($531 million) of Safaricom’s ≈ $2.2 billion annual revenues (2018).

Compared to other players — such as Airtel  Money and Equitel Money — M-Pesa has 80% of Kenya’s mobile money agent network, 82% of the country’s active mobile-money subscribers and transfers 80% of Kenya’s mobile-money transactions, per the latest sector statistics.

A number of Safaricom’s clients (including those it provides payments and internet services to) are companies, SMEs and startups.

Extending AWS services to them will play out next to the building of Microsoft’s $100 million Africa Development Center, with an office in Nairobi, announced last year.