Chipper Cash, the Africa-focused fintech company backed by Silicon Valley Bank and cryptocurrency exchange FTX, is weighing options, including exploring a sale or seeking new investors, Bloomberg reports.
The company had already considered these options even before SVB’s collapse, but no final decision was made, and no option has been considered favouring. However, the company has denied ever being sought to be acquired but confirms that it has received various M&A proposals from different parties, which they evaluate to varying degrees.
On Sunday, in the heat of the SVB drama, Ham Serunjogi, the CEO, announced that SVB’s collapse would not impact global customer operations, and Chipper Cash has a broad set of supportive investors as it still has multiple banking relationships in the US.
We had a very limited amount of money (only about $1M) held in our SVB account at the time the bank was taken over by the California regulator…Additionally, SVB wasn’t the only investor in that round – we had several other new and existing investors participate in the $100m round.
But with all the crashes happening in the crypto financial institutions, is it impossible for crypto exchange platforms to stay away from the heat of the moment?
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Chipper Cash made it big with crypto investors
According to TechCrunch, in November 2021, Chipper Cash raised $150 million in a Series C extension round led by Sam Bankman-Fried’s cryptocurrency exchange platform, FTX.
This came in barely six months after it closed its first Series C round of $100 million led by SVB Capital, the corporate venture capital arm of SVB Financial Group, with participation from other investors, including Deciens Capital, Ribbit Capital, Bezos Expeditions, One Way Ventures, and Tribe Capital.
This funding shot the African company into the skies as it got a $2 billion valuation and became the seventh unicorn in Africa. However, while 2021 seemed like a good year for the African unicorn company, 2022 came with a lot of obstacles as it has been hurt by events related to two of its lead investors — FTX and Silicon Valley Bank.
Last year, FTX shut down after a withdrawal crunch that shook the global tech ecosystem and sent shockwaves to many crypto companies, including African startups like Chipper Cash.
In December 2022, the African crypto exchange platform joined the layoff trends, and in February 2023, it sacked over 150 employees as it decided to concentrate on areas where it could thrive despite the unfavourable macroeconomic conditions that have plagued the global tech ecosystem.
But with the recent happenings, will the company be able to concentrate and manage the heat?
Read Also: Silvergate, Silicon Valley and Signature banks have collapsed; here are 3 tips to stay safe in the midst of market turmoil
Will Chipper Cash sell off or find new investors?
Two of those big crypto financial institutions are currently in a dilemma, excluding FTX. Silvergate has had its fair share of problems; a similar situation has happened at Silicon Valley Bank.
Although, it seems like the American government is trying its best to manage the situation. But if not handled well, the ripple effect will likely be felt globally among tech and crypto startups, including Chipper Cash.
Speaking of Chipper Cash, with the current market state, the idea to sell off or get new investors might be to mitigate liquidity shortages and avoid unnecessary bankruptcies that may follow this drama.
Chipper Cash is the Pan-African cross-border payments platform and an SVB banking client. Like many African tech companies, it depends on US capital for many reasons, one of which is to prevent the effects of local currency devaluation and regulatory uncertainty.
Also, the services SVB provides them, such as banking services, funding, etc, could be hard to replace immediately. This might cause many startups to rush for other investors or a merger acquisition to keep their operations and financial management afloat.
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