How Two Africans Overcame Bias to Build a Startup Worth Billions

How Two Africans Overcame Bias to Build a Startup

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 fl y 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 fi rst 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 fulltime 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 fi rms 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 fi rms including Sam Bankman-Fried’s FTX, Ribbit Capital and Bezos Expeditions. Transactions grew from $200 million in the fi rst 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 off ers similar services (albeit in diff erent 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 profi tability— and helping Africans while doing so. Customers benefi t, 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.”

https://www.forbes.com/sites/jeff kaufl in/2022/06/06/ how-two-africans-overcame-bias-to-build-a-startup-worthbillions/