FTX marked down Chipper Cash’s $2B valuation to $1.25B

African fintech Chipper Cash noticed its valuation slashed from $2 billion to $1.25 billion earlier than FTX’s chapter, in response to documents shared by the Financial Times on Alameda’s enterprise capital portfolio.

Thealike obtained a whiff of this info from sources accustomed to the corporate’s monetary scenario, and although the African cross-border funds firm didn’t verify the news when requested, the filings validate our sources’ particulars. The news is coming a day after Chipper Cash laid off 12.5% of its workforce (about 50 workers).

Last May, Chipper Cash raised a $100 million Series C spherical led by SVB Capital, the funding arm of U.S. high-tech industrial financial institution Silicon Valley Bank. Six months later, it acquired one other $150 million, an extension of that spherical that noticed Chipper Cash elevate a complete of $250 million. Sam Bankman-Fried’s now-defunct cryptocurrency alternate platform FTX led the spherical and Chipper Cash’s valuation skyrocketed to $2 billion, turning into one among Africa’s 5 unicorns final yr.

FTX financed greater than 1 / 4 of Chipper Cash’s extension spherical, at $40 million, in response to the paperwork revealing Alameda’s and FTX’s bets. Despite elevating over $250 million in 2021, Chipper Cash, which counts Afrobeats star Burna Boy and French former skilled soccer participant Patrice Evra as movie star endorsers, went into the market this yr to boost more cash, almost definitely as a cushion to climate the present macroeconomic scenario. But as with many startups this yr, it could have needed to settle with a down spherical. It’s unclear how a lot the four-year-old startup managed to boost in contemporary funding however the paperwork present that Chipper Cash acquired a further $35 million in SAFE from FTX at a $1.25 billion valuation. The new valuation, which can come into full impact in a priced spherical later, represents a 62.5% drop from the valuation Chipper Cash commanded months in the past.

A chronic bull run that noticed public tech shares and personal investments increase over a decade has slowed down, ushering in a brand new wave of job and value cuts. It’s a stark distinction to final yr’s mouthwatering fundraising surroundings the place startups moved quick to rent and lift cash. Many at the moment are struggling to show and keep the high-flying valuations they attained because the pendulum has swung again from a founder’s market to an investor’s market.

Several startup valuations, notably these of fintechs, have fallen spectacularly this yr, with juggernauts corresponding to Stripe and Klarna taking severe valuation haircuts by as a lot as 85% and 61%, respectively. When Thealike reported Chipper Cash’s layoffs yesterday, we famous that some high-profile startups in Africa had slashed valuations internally similar to their international counterparts. As with Chipper Cash, there have been experiences concerning secondary gross sales of startups’ shares falling between 20% and 60%, thus reducing their 409A valuation (an impartial estimate of a startup’s honest market worth, typically used to cost inventory choices to workers).

Smaller African startups are usually not exempt from this valuation rout, both. For occasion, Egyptian social commerce platform Brimore had its valuation slashed by as a lot as 50% in response to sources accustomed to the corporate’s financials. In October, we reported on Nigerian genomics startup 54gene, which not solely noticed its valuation trimmed from $170 million to $50 million but additionally closed the down spherical with buyers requesting a 4x liquidation desire.

It’s not clear if Chipper Cash will keep this valuation in its subsequent priced spherical seeing as its lead investor FTX is at the moment bankrupt. According to FT, the four-year-old fintech was one among over 450 investments Sam Bankman-Fried wished to supply as collateral in an try to boost cash for the FTX group, which incorporates 10 holding firms corresponding to Alameda Research, FTX Ventures, FTX Trading, Maclaurin Investments and Clifton Bay Investments (the arm used to spend money on Chipper Cash.) 

Other African startups on the record embrace: OVEX, a South African digital asset alternate and OTC buying and selling desk ($5 million from FTX at a $122 million valuation); Kenya-based fee automation and settlement firm AZA Finance ($25 million promissory be aware/mortgage); African cell cash platform Wave ($10 million in fairness); South African crypto alternate platform VALR ($4 million fairness); Nigerian crypto alternate startup Bitnob ($500,000 from FTX at a $20 million valuation); Nestcoin, a Nigerian web3 platform whose belongings obtained caught on SBF’s bankrupt crypto alternate platform ($250,000 fairness from FTX at a $30 million valuation), and Congolese-based web3 startup Jambo ($500,000 in tokens).

So far, there are whispers that a few of FTX’s and Alameda’s portfolio firms didn’t obtain the total quantity of investments said within the financials attributable to FTX’s insolvency. If Chipper Cash falls into that class, it’s not laborious to see why it could have laid off employees with the intention to protect runway as the corporate claims to not have been uncovered to FTX’s collapse, in response to two individuals accustomed to the corporate’s dealings with the bankrupt alternate.

Chipper Cash was based in 2018 to supply a no-fee peer-to-peer cross-border fee service for Africans. According to the corporate, its platform is utilized by over 5 million clients throughout Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya — and extra not too long ago, the U.S. and U.Ok the place the FTX-backed startup expanded this yr to facilitate peer-to-peer cash motion from each nations to pick areas in Africa. Last month, the African cross-border fee app introduced that it could acquire Zambian fintech company Zoona in a bid to develop into the Southern African nation.

The platform, which affords P2P transactions, crypto, shares and digital playing cards, has seen its gross income rise 21x from $8 million in Q1 2021 to about $169 million in Q1 2022 and its TPV enhance 8x from $213 million to $1.65 billion throughout the similar quarters, in response to financials seen by Thealike.