Originally published on Forbes by Jeff Kauflin
A pair of twentysomethings from Uganda and Ghana thought there was a fortune to be made bringing transnational financial services to Africa’s 1.2 billion people. With 5 million users, San Francisco-based Chipper Cash is just getting started.
It was the summer of 2018, and Ham Serunjogi, a 24-year-old Ugandan immigrant, thought the pitch he was making to a Palo Alto venture capital firm was going well. He had explained how his fintech startup, Chipper Cash, would enable African consumers to send money to each other, across national borders, more cheaply and easily than the antiquated banking system—a sort of Venmo for the continent.
Then came a question from one of the partners: “Why don’t you go look for donations and grants to fund this?” Because, Serunjogi replied, this will be a “profit-making business.”
The clueless partner persisted: “Why don’t you talk to UNICEF or an impact investing firm?” Serunjogi discreetly declines to name the firm, or to say which VC later told him that “regardless of what the metrics are, I have to apply a discount to this business because it’s in Africa.”
Those memories still sting, even though Chipper Cash has now raised $300 million from a roster of blue-chip VCs, most recently in November at a $2.2 billion valuation.
“These were things I’d have to take with a straight face. But it was outrageous, and it still is,” Serunjogi says from the San Francisco office where he, cofounder Maijid Moujaled and nearly a fifth of the company’s 350 employees are based. The two founders each have an estimated 10% stake in Chipper, translating into paper fortunes north of $200 million.
Sheel Mohnot, a former partner at 500 Startups—Chipper Cash’s first backer—chalks up some early investor resistance to ignorance about Africa. “No one was investing in Africa at the time,” he says. That has changed. Per CB Insights, venture capitalists invested $1.5 billion in African fintech companies last year, up sevenfold from 2020.
Sub-Saharan Africans today have 605 million registered mobile money accounts—with which they can send cash via text message—up from 469 million in 2018. That makes the area fertile ground for more advanced consumer financial apps.
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 payment, crypto trading and the ability to buy U.S. stocks. Excluding crypto transactions, it booked more than $75 million in revenue in 2021, compared with $18 million in 2020.
The idea for Chipper Cash was seeded when high-school-age Serunjogi saw the problems his father encountered trying to move money through Africa’s ossified banking system. Serunjogi’s family lived in Gayaza, a Ugandan town 10 miles outside Kampala, the capital. His parents owned a farm, and his father also ran an IT operation helping local businesses set up networks.
Though hardly rich, the family sent Serunjogi and his two brothers to a private high school and enrolled them in a competitive swim club. In 2010, Serunjogi, then 16, made the Ugandan Youth Olympic team. After having problems completing a bank transfer, his father was forced to fly to South Africa with an envelope full of cash to pay his son’s swim coach while they were training there.
After high school, Serunjogi followed his older brother to Grinnell, a small liberal arts college in Iowa known for its strong academics, where both swam varsity. At Grinnell he met Moujaled, a Ghanaian computer science major who had started a popular student coding group. Almost immediately, the two began talking about developing an African money transfer app. But first they wanted real-world tech experience and needed work visas.
So during his junior year Serunjogi sent cold emails to Mark Zuckerberg and Sheryl Sandberg and snagged an internship with Facebook, which turned into a full-time job in Dublin after he graduated in 2016.
In the spring of 2018, Serunjogi texted Moujaled, who was working as a software engineer in San Francisco, to say it was time to get going. Serunjogi quit his job and moved into Moujaled’s studio apartment, sleeping on an air mattress in the kitchenette.
The two used their combined savings of less than $30,000 and Moujaled’s ongoing salary as seed capital. They launched a test version of their app in July 2018, letting customers send money from Uganda to Ghana for free.
They took pitches to more than 50 VC firms until, in November 2018, 500 Startups agreed to invest $150,000. Before the papers were signed, Mohnot wired $40,000 to Chipper after Serunjogi told him he was about to miss rent. “I will be eternally grateful to him for that,” Serunjogi says.
Chipper’s free, easy-to-use app was a big improvement over the available alternatives. For example, Kenya’s M-Pesa, which launched in 2007, charges 1% to 2% for many domestic transfers.
By mid-2019 Chipper Cash was available in Uganda, Ghana, Kenya and Rwanda. It soon expanded to Nigeria, Africa’s biggest 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 markup fee of 2% to 5% to start generating revenue.
As bitcoin rose from $14,000 to $20,000 in the fall of 2020, Chipper began to let users buy and sell bitcoin and ether, establishing a second lucrative line of business: trading fees. It reached a $2.2 billion valuation in late 2021, with investment from firms 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 that growth comes with added high-stakes challenges. One is liquidity: Chipper needs to make sure it has enough funds in each country to support instant transfers. When it doesn’t, transaction times can slow to a full day or longer. Money can solve that problem.
A bigger worry is competition. Senegal-based startup Wave offers similar services (albeit in different countries so far) and notched a $1.7 billion valuation last year. Other remittance companies such as Remitly and Wise don’t yet let people send money from one African country to another, but there’s nothing stopping them from entering the market.
For now, Serunjogi is focused on maintaining Chipper’s steep growth, moving to profitability—and helping Africans while doing so. Customers benefit, he says, when they can move money easily and have new ways to invest and build wealth. “I’m a deep believer in the role of entrepreneurship and capitalism in improving the lives of people who live in developing countries.”