Chipper Cash Sacks 100+ Workers & Shrinks Units In Further Shakeup

Chipper Cash, a prominent African neobank/payments fintech startup, has further trimmed its workforce, according to reports, after a previous headcount slash that happened in December.

A number of known Kenyan tech publications including Techweez and TechTrendsKE have put out information that Chipper Cash has dismissed more than a third of its workforce, terminating over 100 workers out of a reported previous staff strength of 350.

This extends a restructuring exercise that materialised last year when Chipper cut its staff count by 13 percent, during which 50 employees across Product, Marketing, and Compliance were let go, as WT had learned, though the biggest cuts were meted out on the Engineering roster which sources say had been especially turgid before now and was perhaps rightly downsized.

One source shared at the time that Chipper’s engineering managers and teams were “just too many” and it made sense to trim the headcount. Insiders tied the axing at Chipper Cash to its ongoing efforts at further fundraising at a significantly reduced valuation – of which shedding bloat emerged as an important precondition among courted investors, according to people familiar with the matter.

This week’s layoff, the second wave in quick succession, is understood to have affected employees across engineering leadership, engineers, technical program managers, analysts, and IT staff. The fintech company has also reportedly scrapped its crypto department; it’s rumoured to have let go of all or most employees working in crypto amid the market slump. All other departments are also said to have lost almost half of their workers, with areas such as Business Management now run by a single employee, according to sources cited by the reports.

“The last two years were a period of rapid growth and scaling for us as a business and, to reflect this, our global headcount grew by around 250 people,” said CEO Ham Serunjogi in a statement to TechCrunch. “However, given the macroeconomic climate, we are narrowing our current focus to core markets and products – concentrating our efforts where we know we can thrive. With this hyper-focused prioritization, the reality is that we, unfortunately, need a smaller team at Chipper.”

Serunjogi also reiterated that Chipper’s crypto product remains functional as it’s one of the startup’s fastest-growing products, disagreeing with claims earlier made by Kenyan publications about a deprioritisation of crypto. “We are excited about the future of crypto in Africa and continue to invest in the product,” Serunjogi added. 

Per the reporting on Techweez, Erin Fusaro, the Vice President of Engineering at Chipper Cash, shared that many of her close colleagues and friends were among those who were laid off, with the technical roster especially taking a hit.

Chipper, a startup launched in 2018 to ease digital payments and money transfers for Africans, became the fastest to reach unicorn status in African tech at one point when it crossed the billion-dollar valuation mark in May last year, and it promptly hit a valuation of USD 2 B following a wave of impressive growth and a raft of mega-rounds that drew in marquee investors including Jeff Bezos’s fund Bezos Expeditions, SVB Capital and Ribbit.

However, recent reports suggest Chipper, which would go on to secure huge celebrity endorsement deals with superstars such as Burna Boy and Patrice Evra, had its valuation slashed by more than 37 percent earlier in 2022 by the now-bankrupt crypto firm FTX which had led Chipper’s USD 150 M Series C extension round last year with a USD 40 M investment and looked to add follow-on funding.

Documents cited in reporting by Techcrunch have FTX offering Chipper an additional USD 35 M in SAFE last year at a marked-down valuation of USD 1.25 B. However, there has been some speculation around whether the investments did indeed land in Chipper’s coffers and if Chipper had a material exposure to FTX in the wake of the collapse that has crippled several other companies; though the African fintech unicorn maintains it is untouched by the FTX contagion.

After clawing in around USD 250 M in funding two years ago, sources say Chipper has been in the market for new investment through much of the previous year in response to the current tech market downturn.

Having turned up spending on marketing, hiring, and licenses in the past year to grow to 4 million users across six countries on the continent and USD 169 M in gross revenue as of Q1 2021, Chipper is targeting additional funding to consolidate its position and deepen its penetration. Most recently, it announced the acquisition of beleaguered Zambian fintech Zoona in a strategic expansion play and also secured a license in Malawi.

However, conversations with funders have put improved profitability and decreased expense high on the agenda as a part of ongoing fundraising negotiations, according to persons familiar with the matter, who also shared that a down round is on the agenda with Chipper’s valuation taking another significant cut.

The significant headcount reduction at Chipper is in line with cost-cutting measures seen in tech lately, continuing the trend of mass layoffs that have ravaged the tech industry both locally and globally in the past year. Africa’s burgeoning tech scene has seen its fair share in recent months, with prominent e-tailer Jumia laying off more than 900 workers recently, among others.

UPDATE: This article was updated with the statement shared by Chipper CEO Ham Serunjogi with TechCrunch explaining the rationale behind the layoffs and reaffirming the company’s crypto position.