How to overcome the challenges of switching to usage-based pricing

The usage-based pricing model almost feels like a cheat code — it enables SaaS companies to more efficiently acquire new customers, grow with those customers as they’re successful and keep those customers on the platform.

Compared to their peers, companies with usage-based pricing trade at a 50% revenue multiple premium and see 10pp better net dollar retention rates.

But the shift from pure subscription to usage-based pricing is nearly as complex as going from on-premise to SaaS. It opens up the addressable market by lowering the purchase barrier, which then necessitates finding new ways to scalably acquire users. It more closely aligns payment with a customer’s consumption, thereby impacting cash flow and revenue recognition. And it creates less revenue predictability, which can generate pushback from procurement and legal.

SaaS companies exploring a usage-based model need to plan for both go-to-market and operational challenges spanning from pricing to sales compensation to billing.

Selecting the right usage metric

There are numerous potential usage metrics that SaaS companies could use in their pricing. Datadog charges based on hosts, HubSpot uses marketing contacts, Zapier prices by tasks and Snowflake has compute resources. Picking the wrong usage metric could have disastrous consequences for long-term growth.

The best usage metric meets five key criteria: value-based, flexible, scalable, predictable and feasible.

  • Value-based: It should align with how customers derive value from the product and how they see success. For example, Stripe charges a 2.9% transaction fee and so directly grows as customers grow their business.
  • Flexible: Customers should be able to choose and pay for their exact scope of usage, starting small and scaling as they mature.
  • Scalable: It should grow steadily over time for the average customer once they’ve adopted the product. There’s a reason why cell phone providers now charge based on GB of data rather than talk minutes — data volumes keep going up.
  • Predictable: Customers should be able to reasonably predict their usage so they have budget predictability. (Some assistance may be required during the sales process.)
  • Feasible: It should be possible to monitor, administer and police usage. The metric needs to track with the cost of delivering the service so that customers don’t become unprofitable.

Navigating enterprise legal and procurement teams

Enterprise customers often crave price predictability for annual budgetary purposes. It can be tough for traditional legal and procurement teams to wrap their heads around a purchase with an unspecified cost. SaaS vendors must get creative with different usage-based pricing structures to give enterprise customers greater peace of mind.

tips for navigating legal and procurement teams

Image Credits: Kyle Poyar

Customer engagement software Twilio offers deeper discounts when a customer commits to usage for an extended period. AWS takes this a step further by allowing a customer to commit in advance, but still pay for their usage as it happens. Data analytics company Snowflake lets customers roll over their unused usage credits as long as their next year’s commitment is at least as large as the prior one.

Handling overages

Nobody wants to see a shock expense when they’ve unknowingly exceeded their usage limit. It’s important to design thoughtful overage policies that give customers the feeling of control over how much they’re spending.

If Coinbase is worth $100 billion, what’s a fair valuation for Stripe?

Mere days after we discussed Coinbase at $77 billion and Stripe at $115 billion in the private markets, those same semi-liquid exchanges have provided a new valuation for the cryptocurrency company. It’s now $100 billion, per Axios’ reporting.

Good thing we argued last week that there could be some merit to Coinbase’s $77 billion secondary market valuation from a particular perspective. We’d look silly today if we’d mocked the $77 billion figure only for it to go up by about a third in just a few days.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Luckily for us, Axios also got its hands on a few numbers regarding Coinbase’s 2019 and 2020 financial performance, so we can get into all sorts of trouble this morning. We’ll look at the data, which stretches to the end of Q3 2020, and then do some creative extrapolating into Q1 2021 to decide whether Coinbase at $100 billion makes no sense, a little sense or perfect sense.

As always, we’re riffing, not giving investment advice. So read on if you want to noodle on Coinbase with me; its impending direct listing will be one of the year’s most watched financial events.

We’ll drag Stripe back in at the end. Given that the companies now nearly share private-market valuations, we’d be remiss to not unfairly stack them against one another. Into the breach!

Coinbase @ $100B

Axios’ Dan Primack, a good egg in my experience, got the goods on Coinbase’s historical performance. Summarizing the bits we need, here’s what the crypto exchange got up to recently:

  • Coinbase 2019: $530 million in revenues, $30 million in net losses.
  • Coinbase 2020 Q1-Q3: $691 million in revenues, $141 million in net income.

It’s simple to take the 2020 data that we have and extrapolate it into full-year data. Indeed, you get revenues of $921.33 million and net income of $188 million. Compared to its 2019 data, Coinbase would have managed around 74% growth while swinging steeply into the profitable domain.

That’s a killer year. But it’s actually a bit better than we are giving Coinbase credit for. Poking around volume data compiled by Bitcoinity.org, Coinbase had its biggest period of 2020 in terms of bitcoin trading volume in the fourth quarter. Thinking about Coinbase’s 2020 from a trading perspective using the same dataset, it had a great Q1, more staid Q2 and Q3, and a blockbuster Q4 that ramped to record highs at the end.

Accord launches B2B sales platform with $6M seed

The founders of Accord, an early-stage startup focused on bringing order to B2B sales, are not your typical engineer founders. Instead, the two brothers, Ross and Ryan Rich, worked as sales reps seeing the problems unique to this kind of sale firsthand.

In November 2019, they decided to leave the comfort of their high-paying jobs at Google and Stripe to launch Accord and build what they believe is a missing platform for B2B sales, one that takes into account the needs of both the sales person and the buyer.

Today the company is launching with a $6 million seed round from former employer Stripe and Y Combinator. It should be noted that the founders applied to YC after leaving their jobs and impressed the incubator with their insight and industry experience, even though they didn’t really have a product yet. In fact, they literally drew their original idea on a piece of paper.

Original prototype of Accord sketched on a piece of paper.

The original prototype was just a drawing of their idea. Image Credits: Accord

Recognizing they had the sales skills, but lacked programming chops, they quickly brought in a third partner, Wayne Pan, to bring their idea to life. Today, they have an actual working program with paying customers. They’ve created a kind of online hub for B2B salespeople and buyers to interact.

As co-founder Ross Rich points out, these kinds of sales are very different from the consumer variety, often involving as many as 14 people on average on the buyer side. With so many people involved in the decision-making process, it can become unwieldy pretty quickly.

“We provide within the application shared next steps and milestones to align on and that the buyer can track asynchronously, a resource hub to avoid sorting through those hundreds of emails and threads for a single document or presentation and stakeholder management to make sure the right people are looped in at the right time,” Rich explained.

Accord also integrates with the company CRM like Salesforce to make sure all of that juicy data is being tracked properly in the sales database. At the same time, Rich says the startup wants this platform to be a place for human interaction. Instead of an automated email or text, this provides a place where humans can actually interact with one another, and he believes that human element is important to help reduce the complexity inherent in these kinds of deals.

With $6 million in runway and a stint at Y Combinator under their belts, the founders are ready to make a more concerted go-to-market push. They are currently at nine people, mostly engineers aside from the two sales-focused founders. He figures to be bringing in some new employees this year, but doesn’t really have a sense of how many they will bring on just yet, saying that is something that they will figure out in the coming months.

As they do that, they are already thinking about being inclusive with several women on the engineering team, recognizing if they don’t start diversity early, it will be more difficult later on. “[Hiring a diverse group early] only compounds when you get to nine or 10 people and then when you’re talking to someone and they are wondering, ‘Do I trust this team and is that a culture where I want to work?’ He says if you want to build a diverse and inclusive workplace, you have to start making that investment early.

It’s early days for this team, but they are building a product to help B2B sales teams work more closely and effectively with customers, and with their background and understanding of the space, they seem well-positioned to succeed.

Stripe reportedly joins the tech platforms booting President Trump from their services

It might be easier at this point to ask which tech platforms President Donald Trump can still use.

Payment-processing company Stripe is the latest tech company to kick Donald Trump off of its platform, according to a report in The Wall Street Journal.

That means the president’s campaign website and online fundraising arms will no longer have access to the payment processor’s services, cutting off the Trump campaign from receiving donations.

Sources told the Journal that the reason for the company’s decision was the violation of company policies against encouraging violence.

The move comes as the president has remained largely silent through the official channels at his disposal in the wake of last week’s riot at the Capitol building.

While Trump has been silent, technology companies have been busy repudiating the president’s support by cutting off access to a range of services.

The deplatforming of the president has effectively removed Trump from all social media outlets including Snap, Facebook, Twitter, Pinterest, Spotify and TikTok.

The technology companies that power most financial transactions online have also blocked the president. Shopify and PayPal were the first to take action against the extremists among President Trump supporters who participated in the riot.

As we wrote earlier this week, PayPal has been deactivating the accounts of some groups of Trump supporters who were using the money-transfer fintech to coordinate payments to underwrite the rioters’ actions on Capitol Hill.

The company has actually been actively taking steps against far-right activists for a while. After the Charlottesville protests and subsequent rioting in 2017, the company banned a spate of far-right organizations. These bans have so far not extended directly to the president himself from what TechCrunch can glean.

On Thursday, Shopify announced that it was removing the storefronts for both the Trump campaign and Trump’s personal brand. That’s an evolution on policy for the company, which years ago said that it would not moderate its platform, but in recent years has removed some controversial stores, such as some right-wing shops in 2018.

Now, Stripe has joined the actions against the president, cutting off a lucrative source of income for his political operations.

As the Journal reported, the Trump campaign launched a fundraising blitz to raise money for the slew of lawsuits that the president brought against states around the country. The lawsuits were almost all defeated, but the effort did bring in hundreds of millions of dollars for the Republican party.

 

Color raises $167 million funding at $1.5 billion valuation to expand ‘last mile’ of US health infrastructure

Healthcare startup Color has raised a sizable $167 million in Series D funding round, at a valuation of $1.5 billion post-money, the company announced today. This brings the total raised by Color to $278 million, with its latest large round intended to help it build on a record year of growth in 2020 with even more expansion to help put in place key health infrastructure systems across the U.S. — including those related to the “last mile” delivery of COVID-19 vaccines.

This latest investment into Color was led by General Catalyst, and by funds invested by T. Rowe Price, along with participation from Viking Global investors as well as others. Alongside the funding, the company is also bringing on a number of key senior executives, including Claire Vo (formerly of Optimizely) as chief product officer, Emily Reuter (formerly of Uber, where she played a key role in its IPO process) as VP of Strategy and Operations, and Ashley Chandler (formerly of Stripe) as VP of Marketing.

“I think with the [COVID-19] crisis, it’s really shone the light on that lack of infrastructure. We saw it multiple times, with lab testing, with antigen testing and now with vaccines,” Color CEO and co-founder Othman Laraki told me in an interview. “The model that we’ve been developing, that’s been working really well and we feel like this is the opportunity to really scale it in a very major way. I think literally what’s happening is the building of the public health infrastructure for the country that’s starting off from a technology-first model, as opposed to, what ends up happening in a lot of industries, which is you start off taking your existing logistics and assets, and add technology to them.”

Color’s 2020 was a record year for the company, thanks in part to partnerships like the one it formed with San Francisco to establish testing for healthcare workers and residents. Laraki told me they did about five-fold their prior year’s business, and while the company is already set up to grow on its own sustainably based on the revenue it pulls in from customers, its ambitions and plans for 2021 and beyond made this the right time to help it accelerate further with the addition of more capital.

Laraki described Color’s approach as one that is both cost-efficient for the company, and also significant cost-saving for the healthcare providers it works with. He likens their approach to the shift that happened in retail with the move to online sales — and the contribution of one industry heavyweight in particular.

“At some point, you build Amazon — a technology-first stack that’s optimized around access and scale,” Laraki said. “I think that’s literally what we’re seeing now with healthcare. What’s kind of getting catalyzed right now is we’ve been realizing it applies to the COVID crisis, but also, we started actually working on that for prevention and I think actually it’s going to be applying to a huge surface area in healthcare; basically all the aspects of health that are not acute care where you don’t need to show up in hospital.”

Ultimately, Color’s approach is to rethink healthcare delivery in order to “make it accessible at the edge directly in people’s lives,” with “low transaction costs,” in a way that’s “scalable, [and] doesn’t use a lot of clinical resourcing,” Laraki says. He notes that this is actually very possible once you reasses the problem without relying on a lot of accepted knowledge about the way things are done today, which result in a “heavy stack” versus what you actually need to deliver the desired outcomes.

Laraki doesn’t think the problem is easy to solve — on the contrary, he acknowledges that 2021 is likely to be even more difficult and challenging than 2020 in many ways for the healthcare industry, and we’ve already begun to see evidence of that in the many challenges already faced by vaccine distribution and delivery in its initial rollout. But he’s optimistic about Color’s ability to help address those challenges, and to build out a “last mile” delivery system for crucial care that expands accessibility, while also making sure things are done right.

“When you take a step back, doing COVID testing or COVID vaccinations … those are not complex procedures at all — they’re extremely simple procedures,” he said. “What’s hard is doing them massive scale and with a very low transaction cost to the individual and to the system. And that’s a very different tooling.”

Umba, a digital bank for emerging markets, raises $2M Seed funding to expand across Africa

Umba, a digital bank for emerging markets and aiming first at Africa, has secured a $2 million seed funding round from new investors including Lachy Groom, ex-Head of Issuing at Stripe; Ludlow Ventures; Frontline Ventures and Act Venture.

Currently operating in Kenya and Nigeria, Umba offers a digital financial service alternative to legacy African banks. Its mobile app gives customers a free checking account, free instant peer-to-peer money transfers, lending, deposits, BillPay and cashback. This is in contrast to the generally high-cost barriers found among traditional banking institutions in African countries.

Right now it’s available in Kenya and Nigeria, which have a combined population of over a quarter of a billion people.

Umba competes with Kudao, Carbon, Eversend and ‘Chip or cash’ methods.

Umba’s CEO, Tiernan Kennedy said: “From the outset we built our platform to serve multiple markets, currencies and payment infrastructures. This flexibility is an extremely important consideration as it’s much harder to upgrade your systems at a later date. For example, bank and debit card penetration is high in Nigeria, so Umba is deeply integrated into those payment methods, while across Kenya and East Africa mobile money is dominant so our platform is tightly integrated with those services, too.”

Ludlow Ventures Partner, Brett DeMarrais said: “Umba is the first investment we’ve made in the African market and it’s one we were excited to participate in. The team at Umba have an excellent service that drives down the cost of banking for their customers and democratizes access. The move away from physical branch infrastructure was already underway and it has accelerated this year. It’s clear the African market is maturing and that we’re entering a very interesting phase.”

The news comes shortly after Stripe’s $200M acquisition of Nigerian payment service startup Paystack as well as the acquisition of DPO Group for $288m and Sendwave for $500m, showing a booming ecosystem breaking records in venture rounds and acquisitions.

Stripe announces embedded business banking service Stripe Treasury

Fintech startup Stripe has announced an ambitious new product today called Stripe Treasury. The company is partnering with banks to offer a banking-as-a-service API. In other words, Stripe clients will be able to provide bank accounts to their customers — the service is invite-only for now.

This is part of a bigger trend called embedded finance. Essentially, instead of separating banking services from other services that you use, embedded finance products provide financial services as close as possible to the end customer in the services that they already use.

Other companies have been working on embedded business banking products, such as Wise. Stripe could take advantage of its existing user base to convince them to use Stripe Treasury for new banking products.

For example, Shopify will use Stripe Treasury for Shopify Balance. If a Shopify merchant wants to hold money, pay bills and spend money from their Shopify account, they can open a bank account in Shopify Balance directly. This way, they can skip the traditional bank account. Behind the scenes, Stripe Treasury powers that feature.

And yet, Stripe doesn’t want to become a bank. As usual, the company is focused on infrastructure and payments. It partners with banks, such as Evolve Bank and Goldman Sachs in the U.S. Eventually, Stripe also plans to launch Stripe Treasury in other countries thanks to partnerships with Citibank and Barclays.

Stripe turns everything into API calls. An API is a programming interface that lets you interact with third-party services using simple instructions. For instance, a developer can take advantage of Stripe Treasury to open bank accounts directly from their service by triggering Stripe’s API.

Similarly, you can move money or pay bills using API calls. Combined with Stripe Issuing, you can also issue a virtual or physical card and connect it to a bank account. Slowly, Stripe is building products that cover a bigger chunk of the payment chain.

What to make of Stripe’s possible $100B valuation

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

Welcome to a special Thanksgiving edition of The Exchange. Today we will be brief. But not silent, as there is much to talk about.

Up top, The Exchange noodled on the Slack-Salesforce deal here, so please catch up if you missed that while eating pie for breakfast yesterday. And, sadly, I have no idea why Palantir is seeing its value skyrocket. Normally we’d discuss it, asking ourselves what its gains could mean for the lower tiers of private SaaS companies. But as its public market movement appears to be an artificial bump in value, we’ll just wait.

Here’s what I want to talk about this fine Saturday: Bloomberg reporting that Stripe is in the market for more money, at a price that could value the company at “more than $70 billion or significantly higher, at as much as $100 billion.”

Hot damn. Stripe would become the first or second most valuable startup in the world at those prices, depending on how you count. Startup is a weird word to use for a company worth that much, but as Stripe is still clinging to the private markets like some sort of liferaft, keeps raising external funds, and is presumably more focused on growth than profitability, it retains the hallmark qualities of a tech startup, so, sure, we can call it one.

Which is odd, because Stripe is a huge concern that could be worth twelve-figures, provided that gets that $100 billion price tag. It’s hard to come up with a good reason for why it’s still private, other than the fact that it can get away with it.

Anyhoo, are those reported, possible prices bonkers? Maybe. But there is some logic to them. Recall that Square and PayPal earnings pointed to strong payments volume in recent quarters, which bodes well for Stripe’s own recent growth. Also note that 14 months ago or so, Stripe was already processing “hundreds of billions of dollars of transactions a year.”

You can do fun math at this juncture. Let’s say Stripe’s processing volume was $200 billion last September, and $400 billion today, thinking of the number as an annualized metric. Stripe charges 2.9% plus $0.30 for a transaction, so let’s call it 3% for the sake of simplicity and being conservative. That math shakes out to a run rate of $12 billion.

Now, the company’s actual numbers could be closer to $100 billion, $150 billion and $4.5 billion, right? And Stripe won’t have the same gross margins as Slack .

But you can start to see why Stripe’s new rumored prices aren’t 100% wild. You can make the multiples work if you are a believer in the company’s growth story. And helping the argument are its public comps. Square’s stock has more than tripled this year. PayPal’s value has more than doubled. Adyen’s shares have almost doubled. That’s the sort of public market pull that can really help a super-late-stage startup looking to raise new capital and secure an aggressive price.

To wrap, Stripe’s possible new valuation could make some sense. The fact that it is still a private company does not.

Market Notes

Various and Sundry

And speaking of edtech, Equity’s Natasha Mascarenhas and our intrepid producer Chris Gates put together a special ep on the education technology market. You can listen to it here. It’s good.

Hugs and let’s both go do some cardio,

Alex

7 things we just learned about Sequoia’s European expansion plans

Sequoia Capital, the renowned Silicon Valley venture capital firm that has backed companies like Apple, Google, Dropbox, Airbnb and Stripe, recently disclosed that it had opened its first office in Europe. To staff up, it hired partner Luciana Lixandru away from rival Accel Partners.

Even without an official European presence, Sequoia has quietly operated in the region for more than a decade, first investing in Klarna in 2010. Other Europe-founded companies in its portfolio include Baaima, CEGX, Charlotte Tilbury, Dashlane, Evervault, FON Wireless, Front, Graphcore, Mapillary, Metaswitch Networks, n8n, Remote, Skyscanner, Songkick, Tessian, Tourlane, UiPath, Unity and 6Winderkinder (Wunderlist).

Yet, it is only now that the VC firm is putting people on the ground here in Europe, starting with an office in London that has a remit to invest across the continent.

Working alongside Lixandru is junior investor George Robson, who joined from Revolut. Most recently, Sequoia recruited Zoe Jervier Hewitt from EQT as head of talent in Europe. And finally, Matt Miller, a Sequoia U.S. veteran, is also part of the European efforts and plans to relocate next year, while I also understand that Sequoia’s Doug Leone will be spending a lot of his time in Europe.

Last week at the virtual “Node by Slush” event, I interviewed Lixandru and Miller and teased out some important details about Sequoia’s plans.

1. Sequoia now believes Europe is producing market leaders ahead of Silicon Valley

“There has been this evolution and maturity of the tech ecosystem that has been really meaningful, that has attracted us to want to put down boots on the ground and be more invested in Europe than ever before,” said Sequoia partner Matt Miller.

“One change is in the attitudes of young people. Europe has always been this place where there’s been incredible talent coming out of the computer science programs, across the universities across the continent and the U.K., and these young people previously, were going into careers in investment banking and consulting are bigger conglomerates. And now that those young people are interested in startups and technology careers, that’s fueling a lot of great ideas and a lot of great talent.

“There was a long time this question of, when will there be a $10 billion plus startup, and now there’s multiple of them across the continent. And now the question has really changed: When will there be the next hundred billion dollar startup in Europe, and I think it’s just an evolution over time.

“We find ourselves getting pulled more and more. So when … we want to invest in the best AI semiconductor company in the world, we looked at them in China, Israel and Europe. And the one we wanted to invest in was Graphcore, in Bristol [in the U.K.]. And when we looked … [to] invest in the best process automation company in the world, we looked at automation anywhere in California … and we looked at companies all over the world, and the one we wanted to invest in was UiPath in Romania. And that is increasingly becoming the case.”

“To some extent, success breeds success, too,” said Lixandru. “I think role models are really powerful. And the fact that there have been these category-leading companies created out of Europe, but that are winning on a global scale, like Spotify, Adyen and UiPath … I think that’s really inspirational to the next generation of founders. And I think that has helped a lot.”

2. The firm will make investments out of the same fund as the U.S. and Canada

“We work as one partnership across two geographies, and we invest from the same pool of capital across both geographies,” explained Lixandru. “And the rationale behind that is exactly what Max talked about. We want to be able to partner with category leading companies, and if they start in Paris, or in Stockholm, or in San Francisco, for us, it does not make a difference. We want to partner with them early. And we want to be able to help them on the ground early … whether they start here in Europe or in the U.S.”

Related to this, Sequoia will share carry — the fund’s profits — with partners across the U.S. and Europe, regardless of where partners reside or where the deal was sourced.

“One of the things that I love the most about Sequoia having been here close to nine years now is the way that we operate is very, very team centric, and that everybody is compensated the same amount in a fund, whether or not it is the investment that they lead or the investment that their partner led,” said Miller. “So when we make an investment, we lock arms together as a team, and we work collectively to help that company be successful.”

Miller said portfolio companies in Europe also get to work with Sequoia’s operational supporting partners in the U.S., too. “And the economic model is one that supports that,” he said.

3. Sequoia will continue building out a team on the ground in Europe

African fintech startup Chipper Cash raises $30M backed by Jeff Bezos

African cross-border fintech startup Chipper Cash has raised a $30 million Series B funding round led by Ribbit Capital with participation of Bezos Expeditions — the personal VC fund of Amazon CEO Jeff Bezos.

Chipper Cash was founded in San Francisco in 2018 by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled. The company offers mobile-based, no fee, P2P payment services in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya.

Parallel to its P2P app, the startup also runs Chipper Checkout — a merchant-focused, fee-based payment product that generates the revenue to support Chipper Cash’s free mobile-money business. The company has scaled to 3 million users on its platform and processes an average of 80,000 transactions daily. In June 2020, Chipper Cash reached a monthly payments value of $100 million, according to CEO Ham Serunjogi .

As part of the Series B raise, the startup plans to expand its products and geographic scope. On the product side, that entails offering more business payment solutions, crypto-currency trading options, and investment services.

“We’ll always be a P2P financial transfer platform at our core. But we’ve had demand from our users to offer other value services…like purchasing cryptocurrency assets and making investments in stocks,” Serunjogi told TechCrunch on a call.

Image Credits: Chipper Cash

Chipper Cash has added beta dropdowns on its website and app to buy and sell Bitcoin and invest in U.S. stocks from Africa — the latter through a partnership with U.S. financial services company DriveWealth.

“We’ll launch [the stock product] in Nigeria first so Nigerians have the option to buy fractional stocks — Tesla shares, Apple shares or Amazon shares and others — through our app. We’ll expand into other countries thereafter,” said Serunjogi.

On the business financial services side, the startup plans to offer more API payments solutions. “We’ve been getting a lot of requests from people on our P2P platform, who also have business enterprises, to be able to collect payments for sale of goods,” explained Serunjogi.

Chipper Cash also plans to use its Series B financing for additional country expansion, which the company will announce by the end of 2021.

Jeff Bezos’s backing of Chipper Cash follows a recent string of events that has elevated the visibility of Africa’s startup scene. Over the past decade, the continent’s tech ecosystem has been one of the fastest growing in the world by year year-over-year expansion in venture capital and startup formation, concentrated in countries such as Nigeria, Kenya, and South Africa.

Africa Top VC Markets 2019

Image Credits: TechCrunch/Bryce Durbin

Bringing Africa’s large unbanked population and underbanked consumers and SMEs online has factored prominently. Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

As such, fintech has become Africa’s highest-funded tech sector, receiving the bulk of an estimated $2 billion in VC that went to startups in 2019. Even with the rapid venture funding growth over the last decade, Africa’s tech scene had been performance light, with only one known unicorn (e-commerce venture Jumia) a handful of exits, and no major public share offerings. That changed last year.

In April 2019, Jumia — backed by investors including Goldman Sachs and Mastercard — went public in an NYSE IPO. Later in the year, Nigerian fintech company Interswitch achieved unicorn status after a $200 million investment by Visa.

This year, Network International purchased East African payments startup DPO for $288 million and in August WorldRemit acquired Africa focused remittance company Sendwave for $500 million.

One of the more significant liquidity events in African tech occurred last month, when Stripe acquired Nigerian payment gateway startup Paystack for a reported $200 million.

In an email to TechCrunch, a spokesperson for Bezos Expeditions confirmed the fund’s investment in Chipper Cash, but declined to comment on further plans to back African startups. Per Crunchbase data, the investment would be the first in Africa for the fund. It’s worth noting Bezos Expeditions is not connected to Jeff Bezo’s hallmark business venture, Amazon.

For Chipper Cash, the $30 million Series B raise caps an event-filled two years for the San Francisco-based payments company and founders Ham Serunjogi and Maijid Moujaled. The two came to America for academics, met in Iowa while studying at Grinnell College and ventured out to Silicon Valley for stints in big tech: Facebook for Serunjogi and Flickr and Yahoo! for Moujaled.

Chipper Cash founders Ham Serunjogi (R) and Maijid Moujaled; Image Credits: Chipper Cash

The startup call beckoned and after launching Chipper Cash in 2018, the duo convinced 500 Startups and Liquid 2 Ventures — co-founded by American football legend Joe Montana — to back their company with seed funds. The startup expanded into Nigeria and Southern Africa in 2019, entered a payments partnership with Visa in April and raised a $13.8 million Series A in June.

Chipper Cash founder Ham Serunjogi believes the backing of his company by a notable tech figure, such as Jeff Bezos (the world’s richest person), has benefits beyond his venture.

“It’s a big deal when a world class investor like Bezos or Ribbit goes out of their sweet spot to a new area where they previously haven’t done investments,” he said. “Ultimately, the winner of those things happening is the African tech ecosystem overall, as it will bring more investment from firms of that caliber to African startups.”