Francophone Africa’s first unicorn, Wave, laid off 15% of its staff last month. Two days ago, a former Wave employee Jessica Chervin wrote in a Linkedin post that she was leaving the company after joining in March because Wave’s adjustment to “jarring changes in capital markets in recent months” is forcing it to make hard calls.
In an internal memo seen by TechCabal, the company revealed its plans to scale back operations in three of its new markets including Uganda, Mali and Burkina Faso in hopes that this change will make the startup more agile and less “dependent on outside funding at a time when investors around the world are cutting back”. This move, Wave said, will allow it to deepen its already strong foothold in Senegal and Côte d’Ivoire.
The startup confirmed to TechCrunch, a tech publication, that it would be laying off 15% of its 2,000 employees.
Wave, a spin-off of Sendcash which was acquired by WorldRemit for an estimated $500 million, was founded in 2018 by Drew Durbin and Lincoln Quirk. The YC-backed Fintech startup gained continental prominence after raising $200 million in September 2021 which saw its valuation jump to $1.7 billion in an investment round led by Stripe, Sam Altman, Partech Africa, Sequoia Heritage, and Founders Fund.
Wave’s entrance into the mobile money industry has been tagged as disruptive by various industry leaders & insiders. Wave became the preferred choice over banks and telcos because it offered customers affordable mobile money rates within an accessible and seamless app. Wave, which claims to serve 10 million customers, is tapping into soaring demand for digital payment and mobile money in the french-speaking regions of West Africa.
Wave is joining a long list of tech companies worldwide using lay-offs to cut operational costs amidst growing reports of an imminent global recession that economists predict will also affect developed economies like the UK and the US. Large tech companies like Netflix , Microsoft, Twitter, Substack, Hopin and Tesla have announced layoffs in the last few months.
Some experts believe that the threat of a global recession has led to a tech downturn which in turn has dwindled the valuation of startups, increased prudence of tech venture capital (VC) investors and shifted funding focus from growth-stage startups to early startups.
YCombinator and venture capital firm Sequoia, two companies that currently back Wave, have advised affiliated startups to cut costs to survive the global economic downturn.
Wave’s recent layoffs closely follows news of the startup securing 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.