Fintech firm Chipper Cash exploring sale after SVB fall

Fintech startup Chipper Cash is said to be considering selling off the company after its experience with the now-fallen American bank, Silicon Valley Bank.

The news came after Chipper Cash explained the level of its exposure as a customer SVB and as a startup in which the lender has investment in.

– A key point to note

Bloomberg reported on Tuesday that there was yet no final decision on a possible sale, and that the startup may find new investors instead. Chipper Cash in a response said it regularly receives proposals for merger and takeover, but that it “never sought to be acquired”.

– Why this matters

A sale or merger of the company may have implications for jobs especially at a difficult time for the tech industry when many are laying off thousands of workers.

– Learn more

Launched in 2018, Chipper Cash provides money transfer, cryptocurrency and stock trading services on an app available in Nigeria, South Africa, Ghana, Rwanda, and Uganda.

The company experienced a setback last year after its valuation was slashed to $1.25 billion from $2 billion following its investment with FXT, a crypto exchange company that later collapsed as a result of fraud allegations connected to the company’s co-founder Sam Bankman-Fried.

In trying to cut costs, the company has laid off about 100 plus employees recently across its branches including US, UK, South Africa, Nigeria, and Kenya.

– Link with SVB

Co-founder and chief executive Ham Serunjogi said the company had “insignificant exposure” to the collapsed Silicon Valley Bank as it had “only about $1m” there. He also said the bank owned a 2% stake in Chipper Cash following a $100 million funding round in the first half of 2021.

Before receiving investment from SVB, it had raised a little of $50 million from other firms, notably the California-based fintech investor Ribbit Capital, and startup accelerator 500 Global. Bezos Expeditions, the family office of Amazon founder Jeff Bezos, joined a $30 million round in 2020.

In response to the situation at SVB, Mr Serunjogi said although the U.S. government reacted positively, the situation left many investors including Chipper Cash confused, thinking whether the demise could bring a broader banking meltdown.

“If there is a lack of confidence in the financial and banking systems, it creates a domino effect where you see people lose confidence across the board, and you will see even more runs on banks happening,” he said in an interview with CNBC.

“This really, really strong statement and move by the government to back every single depositor fully, has really helped and restored a significant amount of confidence in the banking industry – which is key to containing the fallout that could have been much, much worse.”