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Africa’s booming fintech scene has Jeff Bezos back for more

Amazon's Jeff Bezos gives a thumbs up as he speaks during an event about Blue Origin's space exploration plans in Washington in 2019.
Reuters/Clodagh Kilcoyne
Jeff Bezos.
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Fintech remains the most funded sector in Africa’s startup ecosystem. Chipper Cash, a cross-border, peer-to-peer payment service, further substantiated this with yet another huge investment.

The fintech startup, which was founded by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled in 2018, closed a $100 million Series C round this week which it will use to introduce more products and grow its team. This latest infusion brings investments in the company over the last year to $143.8 million, reportedly making it Africa’s sixth unicorn. This is in addition to the $8.4 million raised in two seed rounds in 2019.

The company’s Series A and Series B rounds last year raised $13.8 million and $30 million respectively, with the latter notable for being led by Ribbit Capital with participation from Bezos Expeditions, Jeff Bezos’s personal venture capital fund.

Just seven months after his debut on the African startup investment scene, Bezos Expedition returned to participate in Chipper Cash’s Series C investment. It was led by SVB Capital, the investment arm of the US Silicon Valley Bank. Other existing investors like Deciens Capital, Ribbit Capital, One Way Ventures, 500 Startups, Tribe Capital, and Brue2 Ventures participated.

Chipper Cash deploys its payments service in seven African countries—Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya—and it is expanding outside of the continent to offer its services in the UK.

The fintech startup offers cross-border payment solutions to individuals (zero charges) and businesses (paid). The number of users on Chipper Cash increased 33% to 4 million last year, it said. It also introduced crypto transactions in South Africa and Uganda, with virtual VISA cards available for online shopping in Nigeria.

“An injudicious perception of risk in Africa—combined with real concerns around infrastructure gaps and economic complexities—has resulted in the continent being underrepresented on the balance sheet of global investment capital,” Andrew Barden of the Africa Fintech Summit recently wrote. “Very recently, however, the international investor community is becoming increasingly aware that those who misunderstand Africa risk missing the greatest growth opportunity of the 21st century.”

Chipper Cash: an exception 

The fintech boom in Africa continues to be driven by increased digital and fintech literacy, access to smartphones, reduced internet costs, and a push to increase financial inclusion and cashless payments.

“We are experiencing a huge disintermediation of most banking services by these fintech startups,” says Ndubuisi Ekekwe, an entrepreneur and faculty member at the innovation-focused Tekedia Institute. “With speed, security and fair pricing offered by this new generation of financial products, who needs to waste time in bank halls, answering endless questions to wire and transfer money? It is simple: the best products are winning. Chipper Cash is more valued than most banks in Africa.”.

Due to these factors, the number of early-stage deals in the sector is increasing. However, compared to other regions it is low and funding gaps persist, a recent report by research firm Briter Bridges and global tech accelerator Catalyst Fund showed.

Chipper Cash’s profound ascendancy in three years is an exception rather than the norm. The $8.4 million it raised in seed rounds in 2019 proved crucial for its operational progress and economic viability, likely culminating in interest from institutional investors like Bezos.

By comparison, the average amount for African startup seed rounds is $1.5 million, those of India and Latin America are around $4.6 million and $5.7 million respectively.

Chipper Cash is also one of the few African companies to raise a $100 million or more in investment this year, alongside Africa-focused payment technology company Flutterwave, which raised $170 million in a Series C round in March.

Bezos’s interest in the African fintech space is expected to drive up curiosity and action from foreign and local investors (by leading its Series C round, SVB Capital made its maiden foray into the African scene).

But Ekekwe contends that while the participation of Bezos is interesting, what happens next is most important. “The key thing here is that Chipper Cash has a good product and markets are responsible,” he says. “Making those users fans, and growing the number will remain the winning model, irrespective of who wrote the checks.”

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