There is no better way to announce a thriving sector than to become a unicorn – a company with a $1 billion valuation – in just three years of being established as a business.
Three years, that is what it has taken San-Francisco-based Chipper Cash founded by Kenyan duo, Ham Serunjogi, and Maijid Moujaled to amass 4 million customers, be present in seven African countries, and close to $152 million in total funding.
The latest funding that confirmed Chipper Cash’s seat on the unicorn table in Africa, as reported by TechCrunch, was a $100 million Series C round led by SVB Capital, a US-based venture capital (VC) firm.
Although Chipper Cash founders are not able to confirm the unicorn status, TechCrunch estimates that the company could be the most valuable company in Africa, with a valuation in the region of $1-2 billion.
“Obviously, we’re not getting into our valuation, but we’re probably the most valuable private startup in Africa today after this round,” Serunjogi, CEO of Chipper Cash said when asked about the company’s valuation.
If Chipper Cash has indeed joined the unicorn club as TechCrunch projected, it would be the second company doing so in 2021. Flutterwave in March when it raised a Series C round of $170 million to improve its technology, product, customer support, expand to new frontiers, and continue to support shops on its Store to sell to global markets. The funding was led by Avenir Growth Capital and Tiger Global Management LLC.
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After Flutterwave, in May it was learnt that Chinese-based payment company OPay, was in talks with investors to raise over $400 million in funding which will take its valuation to $1.5 billion from $500 million. OPay had in 2019 secured about $120 million from Chinese investors – Sequoia Capital, IDG Capital, Source Code, GSR Ventures, and Meituan-Dianping – which pushed its valuation to $500 million.
Before Flutterwave, OPay, and Chipper Cash, older unicorn fintech companies were Interswitch (2019), and Egyptian electronic payment company, Fawry (2020).
As of July 2020, there were more than 400 unicorn companies around the world. The United States alone has 288 unicorns, China has 122, the UK has 25, India has 21, and Germany has 13.
With 6 unicorn companies as a whole, Africa is at the bottom of the unicorn pyramid. The six unicorns include Interswitch (Nigeria); Fawry (Egypt); Jumia (Nigeria); OPay (Nigeria); and Chipper Cash (Kenya).
Fintech owns the unicorns
Unsurprisingly, the fintech segment of the financial services sector has dominated the unicorn race. Apart from Jumia which is mainly an e-commerce company, the remaining startups are in fintech.
Africa is considered a goldmine for fintech giving the increasing mobile penetration across the countries and the need to provide financial services to millions of people. Nigeria has one of the largest numbers of unbanked people in the world at about 56 million adults.
While mobile penetration is the highest in Africa, Nigeria’s internet penetration at 41 percent as of April is still below the global average of 56 percent. Experts say it could be more given the state of insecurity that has led to the vandalisation of internet infrastructure especially in the northern region of the country.
To reach the unbanked, payment channels like USSD that do not require internet connectivity and banking agents that shifts the burden of access to third-party providers are on the increase.
Chipper Cash which has a presence in countries like Nigeria, Ghana, Uganda, Kenya, South Africa, and Rwanda has done an average of 80,000 transactions daily in November 2020 from its 4 million users and processed $100 million in payment value in June 2020.
“Nigeria has probably the most exciting and vibrant tech ecosystem in Africa. And that is credit directly to CBN for creating and fostering an environment that allowed multiple startups like ourselves and others like Flutterwave to blossom,” Serunjogi said.
Three unicorns minted in 2021
Fintech companies have led the investment in tech startups over the years. It was responsible for over 25 percent of about $1.5 billion startups in Africa raised in 2020. Experts are projecting that 2021 would surpass the achievements of previous years.
This is likely because three of the 6 unicorns have been minted before the first half of 2021. Also, two of the unicorn contenders OPay and Chipper Cash have come in barely three years of their founding. This could mean that the timeframe in which the companies reached the milestone is starting to shorten.
Iyinoluwa Aboyeji, CEO of Future Africa, told BusinessDay in April there would be more unicorns and also IPOs.
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