Why Everyone Is Confused By "African Startups" Funding Figures

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On January 14, 2019, we released our very first report - Digest Africa Index - which focuses on investment into Africa's early stage and technology companies for the year 2018.

In that report, we pointed out that these companies were involved in 454 deals worth $1.19 billion. These deals are a combination of both funding and M&A deals. We also added that the funding figures were at $686.4 million from 415 deals while 39 M&A deals were recorded.

However, our report came out a few weeks after Weetracker had released their own Venture Capital report. The blog's report put the venture capital - not startup - funding figure at $725.6 million. Early this week, Disrupt Africa also released their annual report titled "African Tech Startups Funding Report 2018". In the report, they put the funding figure - by startups - at $334.5 million.

Though, before the Disrupt Africa report came out, iAfrikan had published an article pointing out the fact that "those who compile these reports on startup funding in Afrika rely on publicly disclosed funding in most cases". That statement was only partly true because we don't focus on startup funding, neither does Weetracker do - per this tweet from Rishabh Lawania - a co-founder at Weetracker.

Secondly, we do not only rely on figures from public resources. There are a couple of fund managers and companies that do submit their deals in confidentiality. We, therefore, anonymise that data to keep them away from the public eye.

Though, the article pointed out that "you should read [the reports] with caution if you are looking to make important decisions based on these articles and reports". That is a statement everyone should pay attention to.

Recently, everyone has come out either to criticise or discredit the reports just because they have differing figures. Why would three reports that are focused on totally different things have the same figures?

What most people haven't done is critically read each and every report as well as the methodologies deployed. As Digest Africa, we not only published a methodology on our website, we also published the one that we used for Digest Africa Index as well as the Executive Summary.

Yet, I am still disturbed that people are continuing to compare apples and oranges as well as misquote certain elements of the report for whatever reason, I do not know.

Before releasing their report, Tom Jackson of Disrupt Africa quoted the iAfrikan article and tagged Digest Africa as well as Weetracker with a tone that seemed like he was accusing the two of 'misleading' people. He went on to insinuate that Digest Africa's report said that "African startups" raised a billion dollars. This was not only wrong, but it also wasn't acceptable of someone who is a journalist to accuse others of something that was wrong (see the tweet thread below).

However, this has not stopped. The issue has continued to escalate every passing day.

An example is Max Cuvellier, who works with GSMA as Mobile for Development Head of Programme. Max raised the point of the figures differing on January 29, 2019, on his twitter. But as you can see below, he quoted a wrong figure from our end as he only referenced the number for the top 50 most funded. Besides, this comparison shouldn't be made at all because the three reports - as i have already pointed out - are totally different. Apples and oranges!!

The issue was also picked up by Maxime Bayen who also works at GSMA as the Insights Director for M4D Programme. Maxime came up with a visual which he published today.

Not only was the visual escalating the apples to oranges comparison, but he also pointed out that the number of funding deals by "African startups" from our report as 454. I already pointed out that our report is not focused on startups, so that was not correct. Additionally, we never recorded 454 as the funding deals - the number was 415.

Way Forward

We are committed to building Africa's technology ecosystem as Digest Africa with every single ounce of blood in us, that is why we ensure to triple check the data. The people - like Dario from Briter - that we have worked with know how seriously we take accuracy. Therefore, we shall continue making reports and research briefs about the ecosystem.

However, I would like to suggest that if you're looking to criticise a report or a research brief from Digest Africa, spend some time reading our methodology because not only do we put emphasis on accuracy, we are very transparent. That way, you won't be able to compare apples and oranges.

Lastly, if we publish something about startups, we shall label its startups. However, for now, we are not comfortable with the definition for startups in the market. That is why we use 'early-stage and technology companies'. Though, very soon - as we continue to study and understand the market - we shall confidently coin a definition or borrow one we believe is suited for our standards.

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