Methodology

Digest Africa’s ultimate vision is to be the source of all information and data about Africa’s tech ecosystem. We are building the largest dataset of startups, tech companies, investors, accelerators and funding deals in Africa.

That is why we have created a detailed methodology to ensure that our information and data are not only authoritative but useful and reliable. For the sake of transparency, and so that you are aware of our limitations, we have documented it on this page.

GENERAL PRINCIPLES

  • Accurate

    We strive to make our data as accurate as possible.

  • Timely

    We strive to update our database as quickly as possible.

  • Relevant

    We strive to ensure that we collect data that is relevant

  • Insightful

    We strive to turn raw data into actionable insights through visualizations.

  • Reliable

    We strive to ensure that our data is fit for reference and decision making

DATA COLLECTION

  • Our data collection process is both automated and manual. We, therefore, rely mainly on a data entry team for this.
  • Most of the data is collected from public sources like press releases and media coverage.
  • We also crowdsource data from our users, but this is fact-checked for accuracy.
  • All monetary data is kept in US dollars unless otherwise indicated. In the case of a conversion, the estimated rate will be stated as well as the source.

HOW WE CLASSIFY INDUSTRIES

  • We will avoid classifying companies under “Others” unless absolutely necessary.
  • Our data entry team will check the definition of the industries and get constantly familiarized with them.
  • Companies that are classified to an industry should match the industry’s definition.
  • All companies will be classified under one industry and sub-industry only.
  • For companies that could fit into two or more industries or sub-industries, always gauge what is the primary business activity of the company and classify accordingly.

INDUSTRY CLASSIFICATIONS

We classify companies according to Industries and Sub-industries (internally, we label them “Verticals” and “Industries”). Right now, we have included only detailed definitions for Fintech. More will be added in the future. Here’s the full list:

Ecommerce

An industry that sells or rents, or facilitates the renting or buying and selling, of physical goods using internet technology.

Sub-industries:

  • Marketplaces (general)

    An open platform which facilitates the assembling together of buyers and sellers to transact with one another. Prices are set by the seller, and in many cases sellers have to handle payments or logistics themselves. Consumers can browse and choose to which seller do they want to make purchases with. Does not focus on one specific category of product. There’s usually a way for sellers to post products directly on the marketplace. Includes “classifieds” sites focusing on goods.

  • Marketplaces (fashion and beauty)

    Marketplaces focusing on fashion, apparel, accessories, cosmetics, and/or beauty products.

  • Marketplaces (food)

    Marketplaces focusing on food, both fresh, cooked, or manufactured. Includes agriculture.

  • Marketplaces (consumer electronics)

    Marketplaces focusing on consumer electronics like smartphones, laptops, and other gadgets.

  • Marketplaces (automobiles)

    Marketplaces focusing on the buying or renting of vehicles.

  • Marketplaces (miscellaneous niche)

    Marketplaces focusing on a niche that doesn’t belong to one of the major categories.

  • Retail (general)

    An online retailer buys goods from manufacturers and/or brands, or manufactures the goods themselves, and then sells them to consumers online. Prices are set by the online retailer. Logistics and payments are often handled by them too.

  • Retail (fashion and beauty)

    Online retailers focusing on fashion, apparel, accessories, cosmetics, and/or beauty products.

  • Retail (food)

    Retailers focusing on food, both fresh, cooked, or manufactured. Includes agriculture.

  • Retail (consumer electronics)

    Retailers focusing on consumer electronics like smartphones, laptops, and other gadgets.

  • Retail (automobiles)

    Retailers focusing on the buying or renting of vehicles.

  • Retail (miscellaneous niche)

    Retailers focusing on a niche that doesn’t belong to one of the major categories.

  • Ecommerce seller tools and services

    Tools and services that help brands sell their goods online, either via their own online retail presence or via a marketplace, and track the performance of their online sales.

  • Ecommerce aggregators

    Online services which do not stock goods or facilitate buying and selling, but drive traffic to ecommerce sites. These services typically make money through referral fees from the ecommerce sites. Includes coupon or group buying style sites, price comparison, consumer product review sites, and cashback services.

  • Ecommerce logistics

    Logistics is an industry that’s involved in the acquiring, storing, and transporting of resources. Ecommerce logistics firms primarily serve commerce firms.

  • B2B ecommerce

    Ecommerce which facilitates the online distribution of goods between businesses, which include wholesalers, brands, and retailers.

Fintech

Fintech is a new financial industry that applies technology to improve the management of money. Excludes Kickstarter-like crowdfunding sites.

Sub-industries:

  • Financial accounting and admin

    Administration includes systems and services that make financial administration more efficient. This includes accounting software, which is the systematic and comprehensive recording of financial transactions pertaining to a business. It can be divided into personal and enterprise segments, with the latter covering financial institutions or processes within financial departments in companies.

  • Financial exchanges

    Exchanges allow the direct trading between individuals or businesses of one financial instrument for another.

  • Financial product comparison

    Services which help consumers compare products in order to make purchase decisions, while providing lead generation for service providers.

  • Insurance tech

    Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. Insurtech applies technology to improve the insurance industry.

  • Investments tools and platforms

    An industry which allocates or facilitates the allocation of capital on behalf of customers for the purpose of generating financial return. Does not include companies that structure loans. Includes: Investment platforms, which are services which investors use to trade their own (or their clients’) financial assets, asset managers, which are platforms which allocate and trade financial assets from clients on their behalf, and investment information providers, which provide information to help investors make decisions on trades to make.

  • Loans, lending, and credit

    An industry involved in accepting money from people for the purpose of creating cashflow for others. Includes peer-to-peer lending, which are platforms that facilitate the lending of money between consumers and businesses, online lenders, which are platforms that provide loans directly to users, debt collection, credit risk assessment and credit scoring, which are services that rate consumers and businesses based on their credit history to determine their eligibility for loans and other financial services, and supply chain finance, a set of technology-based business and financing processes that link the various parties in a transaction – the buyer, seller, and financing institution – to lower financing costs and improved business efficiency.

  • Payments and remittance

    An industry that facilitates and processes the transfer of currency from point to point, often in exchange for goods and services, between consumers and consumers, or consumer and businesses. This covers point-of-sales systems, billing, payment authorization, remittance, and payment settlement.

HOW WE CLASSIFY FUNDING STAGES

  • Each company can only use a funding stage once. There will be only one Seed stage, one Series A stage, etc. If another round of an existing funding stage has been announced, the second round will be put under the respective Funding Stage as the second Funding Round.
  • We avoid using “Unspecified Stage.” Instead, we try to find clues to help us decide which stage to assign a funding round to.
  • We will check who the investors are. If the round contains a lot of individuals or firms investing mostly in seed rounds, and if this is the startup’s first public round, we would classify the round as Seed. It is okay for startups to have multiple seed rounds. If the round contains a lot of investors who invest in Series A funding, for example, we can label it as Series A.
  • We will check how its previous rounds are labeled. If the previous round is labeled Seed, then this is likely a Bridge or Series A round. If the previous round/s is/are unspecified, we will do a check of those rounds and see if we can find a label for them.
  • Some funding rounds may include loans. If so, those should be put into a Loan Funding Stage. For example, if a US$10m Series A round includes US$2m in loans, the data input will be US$8m Series A and US$2m Loan.
  • We will check the size of the round. If the value of the round is a lot smaller compared to the previous round, it’s likely to be a Bridge round. If a round is a lot bigger in value than the previous round, it’s likely to be the next stage (eg. Series A after Seed). If the round is less than US$1 million, it’s not likely to be a Series A and beyond round. Rounds that are hundreds of millions of US dollars or above are likely to be Late Stage rounds.
  • We will check other credible news sources. Sometimes, a news source may not state the stage of a round, but another source might.
  • We will check the maturity of the company. Companies with not much traction in terms of revenue or users, or with small traction or users, would be classified as Seed. Companies that are growing or fast-growing would be classified as Series A to B.
  • We will check the time gap between funding rounds. If two funding rounds are less than six months apart, and if their funding stages are not mentioned, they will be classified under the same funding stage.
  • If we are not confident how to classify the round even after considering the above guidelines, we will go with Bridge.

HOW WE DEAL WITH M&A INFORMATION

  • M&A funding rounds will always be added to the acquired or smaller companies in the transaction.
  • In case of company mergers that appear 50:50 or equal, we will do further checking by looking for more sources and accessing the website to determine which actually is the bigger or smaller company in terms of revenue, funding, or valuation.
  • If the merger results in a combined entity with a new name, the bigger company will be the one which gets the company name update, while the smaller one retains the name with M&A information stored in its profile.

FUNDING STAGE CLASSIFICATIONS

  • Seed

    Seed rounds are often the first round of funding for a startup. Most of the investors in this round are individuals, although some investment firms focus on seed stage rounds too. Investors in this round often take common stock as opposed to preferred stock. It’s possible for a startup to have multiple seed rounds.

  • ICO

    An initial coin offering happens when a company sells its digital tokens to buyers in exchange for the cryptocurrency.

  • Bridge

    Bridge equity is an interim investment in exchange for equity used by companies to boost cashflow until a long-term financing option can be arranged. Usually described with words like “Bridge”, “Pre-“, “Post-” labels. Bridge equity can occur after seed rounds or between venture capital rounds. Bridge rounds can be closed quickly and usually involves investors from previous rounds of funding.

  • Series A to B

    These are Early Stage venture rounds invested in startups that are about to see rapid growth. It’s where venture capital firms, private equity firms, and corporates start to get involved. They usually invest in exchange for preferred stock.

  • Early Stage

    Denotes funding stages that are clearly early stage (Seed to Series B), but don’t fit neatly into Seed, Series A, Series B, or Bridge rounds. We use this sparingly.

  • Series C to E

    These are Late Stage venture rounds for more mature companies.

  • Late Stage

    Venture capital and private equity rounds after Series E, or when we know it’s a Late Stage round but the series isn’t specified.

  • Strategic investment

    Investment by larger companies or corporations (which are not venture capital or private equity firms) in smaller companies. Does not include venture capital subsidiaries of corporations (eg. Rakuten Ventures).

  • M&A

    Merger & Acquisition. An event in which a company buys over 50% of another company.

  • IPO

    Initial public offering. The first round of funding raised on a stock exchange. When looking at news reports of IPOs, we will determine if there’s a breakdown of new shares and existing shares that are being sold. If a breakdown is indicated, the amount raised during the IPO will be the value of the new shares only, since the money goes to the company, as opposed to the sale of existing shares, in which the money goes to investors. If no breakdown is available, we will assume that all the shares issued during the IPO are new.

  • Post-IPO Equity

    Firm invests in a post-IPO company in exchange for equity.

  • Post-M&A Equity

    Firm invests in a post-M&A company in exchange for equity.

  • Debt

    Funding which will be returned with interest. No equity involved, at least not upfront. Can happen pre- or post-IPO. Includes venture debt, which is a type of debt for startups and young companies which can be converted into equity at a later stage.

  • Grant

    A grant is any capital awarded to a company, usually from the government or a competition, that does not involve an exchange of equity or an interest.

  • Product crowdfunding

    A product crowdfunding round is where a company will provide its product in exchange to raise capital. This kind of round is also typically completed on a funding platform.

HOW WE DETERMINE COMPANY HEADQUARTERS

  • We will check the website, which might list the headquarters. If the startup has only one office, that’s the headquarters. If no information is available on the website, check the company’s Linkedin page.
  • We will check Linkedin. If the management team is based in one location, that’s the headquarters. If the management team is based in different locations, we will use the CEO’s location as the decider. If the CEO’s location is not available, we will use the location of the next most senior member of the management team.
  • If no other sources are available, we will check media reports to see if there’s mention of the company’s headquarters.

 

Digest Africa Research is a work-in-progress. We aim to improve our methodology and processes to better serve you.