Inside Chipper Cash’s Grueling Battle To Survive The Fintech Winter

Valued at $2.2 billion in 2021, African money-transfer startup Chipper Cash was slow to adapt to the funding collapse of 2022. Now, after layoffs and a deep valuation cut, it’s focusing on the basics–and profitability.

_{Jeff Kauflin}_{, Forbes Staff}

The layoffs at Chipper Cash, a five-year-old fintech startup that lets African consumers send money to each other, started slowly. In July 2022, four recruiters were dismissed. Seven quality assurance engineers came next, two months later. On a Sunday night in early December at 12:01 AM, about 50 employees, or slightly more than 10% of the company, received emails in their personal accounts telling them they no longer had jobs, and access to their work computers had been terminated. Staffers were stunned by the abrupt execution of the layoff. “There was shock and disgust,” a former employee says. Then, after another two months, even deeper cuts came: Chipper slashed about 30% of its staff.

It was a dramatic turnabout for a company that included “lead with empathy” as one of its four corporate values and had been featured in Forbes as one of the most promising startups in fintech just eight months before.

In February 2023, Zepz, a U.K.-based international money-transfer company formerly known as WorldRemit, smelled blood and approached Chipper with a take-out offer. Zepz sent a letter of intent saying it would pay between 5% and 10% of its own stock to buy the startup, pending more due diligence. Zepz had been valued at $5 billion in an August 2021 fundraise, but market values for fintech stocks had since dropped by 50%. Even if you thought Zepz was still worth $5 billion, which was doubtful at best, the deal would have valued Chipper at between $250 million and $500 million–a brutal discount to the $2.2 billion valuation it fetched in late 2021.

The talks broke down. A Zepz spokesperson says the company walked away from the deal because they couldn’t get enough financial information from Chipper, and what they did see made them question the viability of the business. Ham Serunjogi, Chipper’s now 29-year-old CEO, says that Chipper provided all information requested, Zepz refused to share its own financial metrics and Chipper was the one to walk away. “I have never had any intention to go out and look for a buyer or to be acquired,” Serunjogi told us in May, speaking from his office at his home in the San Francisco Bay Area.

In April, Chipper lowered its internal 409A valuation–the market value it uses for issuing employee stock options–by 70%, cutting its common stock share price from about $13 in late 2022 to $3.89, according to a former employee and a document viewed by Forbes. It also raised roughly $25 million in convertible debt, says a person familiar with the financing–debt that will convert to equity at a $450 million valuation if Chipper gets acquired or has another big fundraise.

Chipper’s predicament is emblematic of the challenges many fintech startups face today. In 2020 and 2021, as Covid pushed more transactions online and consumers flocked to fintech apps, startups and their backers acted like the fast growth and good times would continue for years. Chipper, which offers low-cost money transfers, bill payment, stock investing and crypto trading for consumers in Africa, plus payment services for businesses there, had amassed five million registered users in seven countries, including Uganda, Ghana and Nigeria, in just the four years after its founding. It booked more than $75 million in revenue in 2021 (excluding cryptocurrency transactions), according to the company, and between $100 and $150 million in 2022, says a person familiar with its finances, compared with $18 million in 2020.

Serunjogi was pursuing a land-grab, growth-at-all-costs strategy, aiming “to capture as much market share and new geographical footprint as possible. And that’s an expensive endeavor,” he admits. Then as interest rates rose and the stock market sank, investors put away their checkbooks. Profitability suddenly became more important than growth.

Now Chipper is trying to dramatically cut costs and change its strategy while preventing employees from thinking they’re on a sinking ship. “I feel like I’ve grown up so much in the last 12 months,” Serunjogi says.

He has wrestled with the emotional toll of layoffs and a feeling that his employees weren’t taking their jobs seriously enough. In January, he decided to eliminate “lead with empathy” as one of Chipper’s four corporate values. “It was becoming a substitute for accountability,” he says. As he tries to turn the company around, he faces the tough task of still striving for rapid growth–and getting close to profitability–on a much tighter budget.

Serunjogi grew up in Uganda, and while in high school he saw the problems his dad faced trying to move money through Africa’s disjointed banking system. A couple of years later, he enrolled at Grinnell, a small liberal arts college in Iowa, where he met Maijid Moujaled, a Ghanaian computer science major. The two soon began talking about developing an app that could become a Venmo for Africa.

They cofounded Chipper in 2018 and eventually raised $300 million in funding from investors including FTX, Ribbit Capital and Bezos Expeditions. Serunjogi spent aggressively to grow his customer base because of the nature of the money-transfer business: if you’re a consumer in Nigeria, you’d rather be able to send money to twenty different countries than two. “I was fully aware that we were living in a time when capital was cheap. And when capital is cheap, that’s when you want to do the capital-intensive things,” he says.

At the end of 2021, Chipper created its 2022 financial plan and intended to keep burning through large sums of cash, assuming capital would still be abundant. As tech stocks tumbled through the spring of 2022, Chipper began revising its plans. But while many fintech companies started doing layoffs that summer, Serunjogi and Moujaled held out.

Serunjogi focused on driving Chipper as fast as possible–one way he tried to do that was by keeping the board small. Though he insists he has a large group of advisors, Chipper only had (and still has) just three voting board members: Serunjogi, Moujaled and Dan Kimerling, who runs fintech-focused venture capital firm Deciens. Similar-stage startups usually have five or more. “At the early stage of a business, the founders’ vision still has a premium. You’re trying to execute on something you uniquely see,” Serunjogi says.

By mid-2022, Serunjogi wanted to slow down expansion, but he concluded Chipper had already progressed so far on some projects that it would be too costly or wasteful to abandon them. One example: The company had already done much regulatory legwork to launch money transfers simultaneously in 10 new nations, each with its own set of legal requirements. So it charged ahead anyway with the big rollout over a two-week period in the fall of 2022.

When asked whether he chases too many goals at once, Serunjogi says, “If you set a goal of 10 versus a goal of 100, you will get to 9 out of 10, and you’ll get to 90 out of 100 … I strongly believe in setting stretch goals–that has been my style.”

Chipper hired about 150 employees in 2022, hitting almost 450 at its peak size. It spent aggressively on marketing, paying spokespeople like Burna Boy, Africa’s most streamed artist, to appear in ads. Within the fintech industry and in Africa, Chipper was gaining attention. In the middle of last year, Forbes published an article chronicling Chipper’s founding story and fast growth.

When crypto exchange FTX collapsed suddenly last November, the mood inside Chipper grew much darker, former employees say. Sam Bankman-Fried’s company had been a major investor in Chipper’s 2021 mega funding round, and staffers found the situation deeply unsettling. It also exacerbated the bear market for the digital asset industry and dampened interest in something that had been helping Chipper attract new users: crypto investing.

With marketing efforts drastically reduced, Chipper saw its number of active users shrink in 2022, according to a former employee, and though it had more than five million registered users, only about one million of them were engaging with the app monthly, the company says. Serunjogi admits Chipper has seen a dip in usage and attributes it to Chipper’s raising prices on money transfers and other features to focus more on profitability. He says that new-user signups and “people who use multiple products” still “continue to fare quite well.”

Chipper will soon start offering U.S. dollar-denominated accounts to African customers to try to entice more users. Serunjogi says receiving international payments has been one of the most requested features, particularly for freelancers earning a living online. While crypto was once a major growth driver for Chipper, the startup seems to be going back to basics. “We’re essentially giving anyone access to one of the most trusted currencies in the world,” he says.

On top of spiking interest rates and a dormant funding market, Chipper has been facing another macroeconomic headwind: the naira, Nigeria’s currency that Chipper needs to hold to enable customers’ money transfers, has dramatically declined in value. It had been falling since early 2020, and in the second half of 2022 it lost another 8%, ultimately contributing to a negative gross profit margin for Chipper, an unusual financial profile for a company of its size.

When the fintech market recovers from its deep downturn, entrepreneurs’ approaches to layoffs will likely turn out to have had a major impact on startups’ survival and trajectory. At Chipper, Serunjogi and Moujaled have done at least five sets of layoffs over the past 13 months. Judging by the frequency and increasing depth of the cuts compared with those of other major fintechs, Chipper waited too long to get lean.

“Layoffs were agonizing decisions. That is the stuff that kept me up at night,” Serunjogi says. “It’s like a piece of your humanity dies … Imagine having a conversation with people who you really like, who are very good, who made sacrifices for the business to be where it is today. They depend on that income. And you tell that person, ‘I have to cut you.’ And they have a family to look after.”

Why didn’t he opt for a smaller number of deeper cuts to get them over with faster? “These are human beings we’re talking about,” he says. “If I can save someone’s job, I’m going to try to find a way to save it until clearly it doesn’t make sense to be saved.” He adds that some international rules require companies to do layoffs over a period of three months, which drags out the process.

Some former Chipper employees think Serunjogi has botched the communication of bad news over the past year. For instance, after layoffs began, workers started asking questions about revenue and how much cash was left in the bank at company-wide meetings. Serunjogi often responded to the effect of, “Why do you guys keep asking this? You don’t need to know,” according to a former employee. Another staffer felt Chipper became a “very secretive environment.”

“We have various responsibilities and confidentiality we have to maintain in running a business,” Serunjogi says. “In all our all-hands meetings we used to show revenue, revenue growth by product, et cetera–until people started leaking it. We would start to see these things showing up in the press,” he says, chuckling.

He started to believe employees felt too entitled and weren’t taking their jobs seriously enough. That led him to remove the “lead with empathy” corporate value–he thought people were using it to excuse mediocre performance. Chipper replaced it with “be customer obsessed.”

“If you make a mistake, I have to come down hard on you, because the consequences for all of us are that much greater [at a startup],” Serunjogi says. “Don’t mistake the early successes we’ve had with ‘we’ve made it.’ No, we can still die.” He admires Bill Gates for working all the time and not taking vacation during Microsoft’s early days, and he appreciated Elon Musk’s November 2022 ultimatum to Twitter employees that staying at the company would require “extremely hardcore” work and long hours.

In the spring of 2023, some employees began saying Chipper had just ten months of cash left in the bank, with one posting it in a Glassdoor review. People inside the startup were asking how it could have blown through the $300 million it raised, according to a former engineering manager.

Regarding Chipper’s rumored short runway, “I genuinely don’t know why and who would say something like that,” Serunjogi says, expressing frustration that anyone would discuss internal company matters publicly. “We have a tremendous amount of money on our balance sheet, so we’re fine,” he told us in late May.

Serunjogi doesn’t like talking much about the specifics of what he would have done differently if he could do it all again. When asked the question multiple times, he told us, “We are laying the foundation for what is going to make us successful over the next 10 or 20 years. I obsess less about what was happening in the last six months or three months or 12 months.” He concedes there are many things he’d do differently but demurs from spelling them out and says, “We are one of the most successful companies in Africa.”

What is clear: Chipper has cut nearly 175 people and scrapped plans to expand into Europe and the Middle East for now, since entering a new country takes months of work–it requires hiring lawyers and consultants and sometimes staffing at least 10 people in a new nation. It has refocused on Africa, cutting many U.S. employees who sit thousands of miles away from its customers. Serunjogi plans to hire fewer than 50 people this year. The marketing budget has been “meaningfully scaled back,” Serunjogi says, and he claims the company is “about to be profitable.”

Somehow, when asked to reflect on the past year, the young entrepreneur always comes back with a positive spin. “What we’ve achieved so far–if I went back and started the whole thing again, I would be very happy to come back to that same exact point.”