GET INFORMED
Francophone Africa’s first unicorn, Wave, laid off 15% of its staff last month. News of the lay-off first got out after an employee of Wave, Jessica Chervin, who joined the company as an expansion lead in March, wrote on Linkedin yesterday that she was leaving the company.
“Like many tech companies, Wave is adjusting rapidly to the jarring changes in capital markets in recent months and like the best of them (and importantly, as a financial institution), it has had to make very hard calls in order to ensure that it can continue to serve customers in existing markets now and long into the future,” Chervin, who is also an angel investor and previously held a leadership role in Andela wrote. “This vital shift in strategic priorities means that I and many others are leaving Wave far earlier than anyone had hoped.”
A Wave spokesperson confirmed to TechCrunch that 15% of its 20,000-strong workforce were laid off, amounting to about 300 employees affected. Most of the affected employees have worked in Wave’s new markets: Burkina Faso, Uganda, and Mali.
According to a statement by Wave to its employees dated June 30, 2022, the Senegal-based fintech is scaling back on these new markets in a bid to remain agile and ensure that the company “won’t be dependent on outside funding at a time when investors around the world are cutting back”.
Wave said that this move to redirect its focus will allow it to strengthen its business and current market positioning in Senegal and Côte d’Ivoire.
Wave, formerly known as Sendcash, was founded in 2015 by Drew Durbin and Lincoln Quirk, was incubated at Y Combinator, and gained continental prominence in 2020 when it was acquired by WorldRemit for about $500 million. The company is currently valued at $1.7 billion after raising $200 million in September 2021 led by investors such as Stripe, Sam Altman, Partech Africa, Sequoia Heritage, and Founders Fund.
Wave has disrupted the mobile money industry dominated by banks and telcos by offering customers mobile money services that are cheap and allowing them to access its services through a sleeky app interface and QR codes. Wave, which claims to serve 10 million customers, is tapping into soaring demands for digital payment and mobile money in West Africa.
Globally, lay-offs have become an operating-cost-cutting strategy for tech companies amidst recession fears, higher interest rates, and increased prudence of tech venture capital (VC) investors and shifting focus of funding from growth-stage startups to early startups. Large tech companies like Netflix , Microsoft, Twitter, Substack, Hopin and Tesla have announced layoffs in the last few months. This slowdown in venture capital funding and the massive growth of tech companies worldwide, which has been labelled the tech downturn, has also prompted prominent incubator and venture capital firm, Y Combinator and Sequoia, to advise startups to cut costs.
As funding dries up for growth-stage tech startups, Wave could be at more risk. However, the company just got some cushion funding last week when it secured a €90 million syndicated loan. The deal, which is one of the largest debt deals on the continent, consists of €25 million from the International Finance Corporation (IFC); a combined €41 million from Symbiotics, Blue Orchard, Lendable, and responsAbility Investments; and €24 million from Finnfund, and Norfund. Commenting on the raise, Wave said that the loan will help it increase its customer base and grow its operations in Senegal and Ivory Coast. It is no wonder that despite the recent lay-off decision, it still has 19 open roles, including at least one in Uganda.
The wave of layoffs continues to sweep through the African continent with mobility startup Swvl and healthtech startup Vezeeta laying off 400 and 50 employees respectively.