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Methodology

Digest Africa’s ultimate vision is to organize all the information and data about Africa's technology ecosystem as well as disseminate it in ways that are easy to consume and understand. Currently, we are building the most abundant resource of information and data about startups, tech companies, investors, accelerators and deals across 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 our methodology 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.

WHAT WE COVER

We keep track of activities regarding funding and acquisitions on a day-to-day basis and write stories, collect the data, and publish reports about them, though our focus is on for-profit early-stage and technology companies that are either incorporated or headquartered in Africa. If a company is not headquartered or incorporated in Africa, it should either have the continent as its primary or only market. An example of Asoko Insights - headquartered in London - can be cited here, which we cover and include in reports about Africa.

DATA COLLECTION

Our data collection process is both automatic and manual. We, therefore, rely mainly on a data entry team for this. We collect most of the data from public sources like competition authorities, the securities and exchange commission, press releases and reputable media companies. We also crowdsource data from the general tech community though we always ensure to fact-check it for accuracy. In cases where there are inconsistencies in the available data, we contact the companies or investors concerned. We record all financial data in US dollars. In the case of data presented in a different currency, we make the conversions using Bloomberg’s currency converter. Monetary data is usually rounded off to the nearest ten, the nearest hundred or the nearest thousand.

HOW WE CLASSIFY INDUSTRIES

We avoid classifying companies under “Others” unless necessary. Our data entry team always checks the definition of the industries and get instantly familiarised with them. All companies are classified under only one industry and sub-industry. For companies that could fit into two or more industries or sub-industries, we always gauge what is the primary business activity of the company and classify accordingly.

INDUSTRY CLASSIFICATIONS

For now, the focus is to ensure that our research and reports are easily understood yet relevant. Therefore, we shall focus on a few industries where there’s much activity. As other sectors pick momentum, we shall continue to break them away from Generalization terms like Other Technologies. It is, however, important to note that these classifications apply to startups and technology companies. We classify companies according to Industries and Sub-industries (though they can be used interchangeably as Sectors and Sub-sectors). Right now, we have categorised all companies under 11 sectors. Before we organise a company under a given sector, we carefully study it to find out if its solution and operations do not and cannot significantly overlap into another. The 11 sectors are:

  • Agriculture

    The agricultural sector covers all companies that are in the agriculture value chain. Companies classified under this sector include those that are directly enabling the agriculture value chain and peripheral activities to the agriculture value chain including providing marketplace services, logistics and other services in the agriculture value chain.

  • Financial Services

    The financial services sector is made up of companies that offer a broad range of services to retail and institutional customers, which include Insurance, financial technology, financial reporting and accounting, brokerage and securities exchanges, investments management tools and platforms, savings and credit, as well as payments and remittance.

  • E-commerce

    The Ecommerce sector includes companies whose primary focus is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business. Under Ecommerce, there are sub-sectors like; General, Food Delivery, Classifieds, Fashion & Beauty, Consumer Electronics, Automobiles, Food & Beverages, Aggregators, Logistics and financial technology.

  • Energy & Resources

    The energy and resources sector includes companies involved in the production and sale of energy including fuel extraction, manufacturing, refining and distribution. In particular, the energy industry comprises the following sectors: the petroleum sector, including oil companies, petroleum refiners, fuel transport and end-user sales; the gas sector, including natural gas and coal gas; the electricity generation, transmission, distribution and sales; the coal sector; the nuclear power sector; the renewable energy sector comprising different technologies such as solar, wind, hydroelectricity and alternative fuels.

  • Education

    The Education sector includes companies that facilitate learning and provides instruction and training in a wide variety of subjects, which may be through the use of technology and software. The education sector includes sectors such as Primary Education; Secondary Education; Vocational and Tertiary Institutions; Ancillary education services, such as tutoring, a unique or alternative school, educational content providers and professional development of administrators and teachers.

  • Media & Entertainment

    The Media & Entertainment sector includes companies that produce and distribute movies, television programs and commercials, streaming content, music and audio recordings, broadcast, radio, book publishing, video games and supplementary services and products.

  • Health & Pharmaceuticals

    The health and pharma industry consists of companies and entities that provide medical equipment, medical supplies, and healthcare services, such as hospitals, home healthcare providers, and nursing homes, which includes companies that produce biotechnology, pharmaceuticals, research and scientific services

  • Transportation & Logistics

    The Transport sector includes companies providing transport of passengers and cargo, warehousing and storage for goods, scenic and sightseeing transport, and support activities related to modes of transport. The transport industry works in concert with the logistics industry that includes all companies involved in obtaining, producing and distributing material and products to the correct place and in the correct quantities. Logistics includes the process of planning, implementing and controlling procedures for efficient and effective transport and storage of goods

  • Emerging Technologies

    Emerging Technologies includes companies that cover a set of technologies, which are currently viewed as disruptive and have developed over the last 2- 10 years. These are the technologies that have evolved as a result of the advent of internet-capable mobile devices, and sensor technology has allowed for increased connectivity, data collection and access to information. These include Drones, Blockchain, AI, Machine Learning, 3D printing and Robotics.

  • Travel & Leisure

    This sector includes all companies that provide various types of travel services, including travel agencies, tour operators, cruise lines, and Internet vacation reservations and services. We classify all companies that offer recreational services, entertainment, transport, hospitality and other services under the travel industry under this sector.

  • Other Technologies or Information Technology

    Other Technologies and Information technology (IT) includes companies that develop solutions that use computers to store, retrieve, transmit, and manipulate data, or information, often in the context of a business or other enterprise. IT is considered to be a subset of information and communications technology (ICT).

HOW WE CLASSIFY FUNDING STAGES

Each company can only use a funding stage once. Therefore, there’s only one Seed stage, one Series A stage, and so on. If a company announces another round of an existing funding stage, we put the second round 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 each funding round.

We also check whom the investors are and classify all funding raised from accelerators, incubators and angel investors under Seed. 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 many investors who invest in Series A funding, for example, we can label it as Series A. We also check how its previous rounds are labelled. If the last round is marked Seed, then this is likely a Bridge or Series A round. If the previous round/s is/are unspecified, we do a check of those rounds and see if we can find a label for them.

Some funding rounds may include loans. If so, we put them under the Debt Financing Stage. For example, if a $10m Series A round includes $2m in loans, the data input is $8m Series A and $2m Debt Financing.

We also check the size of the round. If the value of the series is a lot smaller compared to the previous one, it’s likely to be a Bridge round. If it is a lot bigger in value than the last round, it’s likely to be the next stage (e.g. Series A after Seed). If the round is less than $1 million, it’s not likely to be a Series A and beyond round. Funding rounds that are more than a million dollars but less than $20 million are likely to be Early Venture rounds while rounds that are hundreds of millions of dollars or more are likely to be Late Stage rounds.

We also check other credible news sources. Sometimes, one news source may not state the stage of the round, but another source might. We also check the maturity of the company. Companies with not much traction regarding revenue or users, or with little traction or users, would be classified as Seed. Companies that are fast-growing are classified as Series A to B. We also 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 are classified under the same funding stage. If we are not confident how to classify the round even after considering the above guidelines, we then go with Bridge.

It is also important to note that funding rounds - especially Early Venture and Late Venture - for companies across Africa take longer to close compared to the rest of the market. Therefore, it is not unusual for a company to close their funding round after 12 or months. For example, Paga raised their first tranche of Series B in 2015, and it wasn't until three years later that they raised a Series B II. Startups across Africa receive a significant amount of non-equity investment. All funding received from grants, prizes, awards, and competitions is classified under Grants.

HOW WE DEAL WITH FUNDING DATES

It is usually not easy to find out when a deal was concluded. For that reason, unless stated, we take the date when the company announces the deal to the media. For example, if a deal closed in May 2018 but published in October 2018, we would go with October unless the startup points out that the deal closed in May 2018. We use the Date format of mm/dd/yyyy but usually with the month in words. For example, 12/08/2018 would be written as Dec 08, 2018.

HOW WE DEAL WITH ACQUISITION INFORMATION

Acquisitions are always added to the acquired or smaller companies in the transaction. In case of company mergers that appear 50:50 or equal, wel do further checking by looking for more sources and accessing the website to determine which is the bigger or smaller company regarding revenue, funding, or valuation. If the merger results in a combined entity with a new name, we assign the bigger company the name update, while the smaller one retains the name with acquisition information stored in its profile.

FUNDING STAGE CLASSIFICATIONS

  • Grants [No-equity rounds/Prizes/Awards/Grants]

    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.

  • Seed Rounds [Angel/Accelerator/Pre-Seed/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.

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

  • Later Venture Rounds [Series C+]

    These are Late Stage Venture Rounds for more mature companies and includes funding rounds after Series C or where it is stated that it is a Late Stage round, but the series isn’t specified.

  • Debt Financing

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

  • Offerings [ICO/IPO/Crowdfunding]

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

  • ICO

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

  • Initial Public Offering

    The first round of funding raised on a stock exchange. We determine if there’s a breakdown of new shares and existing shares that are being sold by looking at news reports of IPOs as well as the prospectuses. If a breakdown is indicated, the amount raised during the IPO is taken as 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 assume that all the shares issued during the IPO are new.

  • Acquisition

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

  • Bridge

    Bridge financing is an interim investment used by companies to boost cash flow until a long-term financing option can be arranged. Usually described with words like “Bridge”, “Pre-“, “Post-” labels. Bridge financing 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.

  • Strategic investment/Corporate Round

    Investment by larger companies or corporations (which are not venture capital or private equity firms) in smaller companies. It does not include venture capital subsidiaries of corporations (e.g. Naspers Ventures).

HOW WE DETERMINE COMPANY HEADQUARTERS

It is hard to determine which country a startup in Africa belongs to by relying on their incorporation information, partly because some companies - especially those with investors from the US - usually incorporate in the US. While others may opt for Mauritius as the incorporation place for the holding company.

Therefore, to allocate a company a country, we rely on where their headquarters are. By default, if the company has its headquarter on the continent, we take that. If a company is not headquartered on the continent, Asoko Insights, we then consider their first market of entry into the continent or where most of their senior team is on the continent or their primary country of operation. An example of Zola Electric can be cited here where we take Tanzania as their headquarters because that is where they have most of their operations.

To find out the headquarters, we check the company website, and if no information is available, then we check the company’s Linkedin page. If there's no information on LinkedIn, too, but the management team is based in one location, that’s what we consider as the headquarters. If the management team is based in different locations, we use the CEO’s location as the decider. If the CEO’s location is not available, we use the location of the next most senior member of the management team. If no other sources are available, we 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. Therefore, if you have any questions or queries, don’t hesitate to reach out. You can email [email protected]