How two Africans overcame prejudice to build a startup worth billions
A twenty-year-old couple from Uganda and Ghana believed that there was wealth to be made by providing transnational financial services to the 1.2 billion people in Africa. With 5 million users, San Francisco-based Chipper Cash is just getting started.
IIt was summer 2018and Ham Serunjogi, a 24-year-old Ugandan immigrant, thought his bid for venture capital firm Palo Alto was going well. He explained how his fintech startup, Chipper Cash, will enable African consumers to send money to each other, across national borders, at lower cost and with greater ease than the legacy banking system — a kind of Venmo for the continent.
Then a question came from one of the partners: “Why don’t you go look for donations and grants to fund this?” Because, Serunjogi replied, this would be a file profit Business. The clueless partner insisted: “Why don’t you talk to UNICEF or an influential investment firm?” Serunjogi discreetly refuses to name the company, or to mention a venture capital that later tells him that “no matter what the metrics, I have to discount this business because it’s in Africa.”
Those memories are still vivid, though, as Chipper Cash has now raised $300 million from a list of excellent venture capitalists, most recently in November at a $2.2 billion valuation. It was outrageous, said Serungugi of the San Francisco office where he, co-founder Majid Majid and one-fifth of the company’s 350 employees work, and it still is. Each of the founders owns an estimated 10% stake in Chipper. , which translates to paper fortunes north of $200 million.
Shel Mohnot, former partner at 500 Startups — Chipper Cash’s first backer — is drawing some early resistance to investors’ ignorance of Africa. “No one was investing in Africa at the time,” he says. That has changed. According to CB Insights, venture capitalists invested $1.5 billion in African fintech companies last year, a sevenfold increase from 2020. Today, sub-Saharan Africans have 605 million registered cash accounts — where they can send money via text — up from 469 million in 2018 and this makes the region fertile ground for more advanced consumer financial applications.
Four years after its founding, Chipper Cash has 5 million registered users in seven countries, including Uganda, Ghana and Nigeria. It offers not only low cost money transfers but bill payments, cryptocurrency trading and the ability to buy US stocks. Excluding cryptocurrency transactions, it generated more than $75 million in revenue in 2021, compared to $18 million in 2020.
The idea for Chipper Cash arose when high school age Serunjogi saw the problems his father faced while trying to move money through the petrified banking system in Africa. The Serunguji family lived in the Ugandan city of Giaza, 10 miles outside the capital, Kampala. His parents owned a farm, and his father also ran an IT operation to help local businesses set up networks. Although not rich, the family sent Serunguji and his two brothers to a private high school and enrolled them in a competitive swimming club. In 2010, Serungugi, then 16, was the Ugandan youth Olympic team. After he had problems completing the bank transfer, his father was forced to travel to South Africa with an envelope full of cash to pay his son’s swimming coach while they were training there.
After high school, Serunguji followed his older brother to Grinnell, a small liberal arts college in Iowa known for its strong academics, both of whom swam through the university. At Grinnell, he met Moujaled, a computer science specialist from Ghana who had started a popular student coding group. Almost immediately, the two started talking about developing an African money transfer app. But first they wanted real technical expertise and needed work visas. So, during his freshman year, Serunguji sent cold emails to Mark Zuckerberg and Sheryl Sandberg and landed an internship with Facebook, which turned into a full-time job in Dublin after he graduated in 2016.
In the spring of 2018, Serungugi texted Mogalad, who was a software engineer in San Francisco, to say it was time to get started. Serunjogi quit his job and moved into Moujaled’s studio apartment, sleeping on an air mattress in the small kitchen. The two used their combined savings of less than $30,000 and a continuous volume salary as seed capital. They launched a beta version of their app in July 2018, allowing customers to send money from Uganda to Ghana for free.
They have given presentations to over 50 venture capital firms until, in November 2018, 500 Startups agreed to invest $150,000. Before signing the papers, Mohnot sent Chipper $40,000 after Serunjogi told him he was about to miss the rent. “I will be forever grateful to him for that,” says Serunguji.
The free and easy to use Chipper app was a huge improvement over the alternatives available. For example, Kenya’s M-Pesa, which was launched in 2007, charges between 1% and 2% for many local 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 by the end of the year, it had 600,000 customers. It also introduced a foreign exchange rate fee of 2% to 5% to start generating revenue. As bitcoin soared from $14,000 to $20,000 in the fall of 2020, Chipper began allowing users to buy and sell bitcoin and ether, creating a second profitable line of business: trading fees. It reached a valuation of $2.2 billion in late 2021, with investments from companies including 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 high-risk challenges. The first is liquidity: Chipper needs to make sure it has enough funds in each country to support instant transfers. When that doesn’t happen, transaction times can slow down to a full day or more. Money can solve this problem. The biggest concern is competition. Senegal-based startup Wave offers similar services (albeit in different countries so far) and had a valuation of $1.7 billion last year. Other money transfer companies like Remitly and Wise do not allow people to send money from one African country to another, but there is nothing to stop them from entering the market.
For now, Serunjogi is focused on maintaining sharp Chipper growth, transitioning to profitability — and helping Africans while doing so. Clients benefit, he says, when they can move money easily and have new ways to invest and build wealth. “I am a firm believer in the role of entrepreneurship and capitalism in improving the lives of people living in developing countries.”