Behind the Criteria: Scalability
Updated: Feb 11, 2021
YASR measured scalability using five factors: the vertical, new customer acquisition, customer retention, recurring revenue and market share
The Yale Africa Startup Review ('YASR') due diligence process evaluated scalability by looking at five areas: the vertical, new customer acquisition, customer retention, recurring revenue and market share. We received hundreds of nominations from companies that span all stages, pre-seed to series C, and cover 30 countries and 16 verticals. This created an inherent difficulty in assessing and determining the potential to scale - especially comparing one company to the next.
When we speak to ecosystem builders and entrepreneurs across the Continent, they consistently tell us that one of their challenges/opportunities is the ability to scale quickly and sustainably. The financing environment is extremely competitive and challenging yet key to the survival of these startups. It ties to how well they can scale, grow their customer base and the bottom line. There are many ways to assess a company’s “potential” to scale. One may choose to look into which vertical/industry the company is playing in. Another may assess relevant macro-trends, technology maturity, adoption rates, ecosystem complements and timing. Others may use surrogate measures of growth and implied scale such as annual recurring revenue, net customer acquisition/retention rates, sales efficiency and market share growth.
Cognizant of this fact, we are taking looking at both qualitative and quantitative data. Nominated companies are asked to share with YASR their current strategy to acquire new customers and how they are retaining current customers. They also provide us with insights into their revenue from repeat product/service sales and how they perceive their market share. The editorial team and independent judges - comprised of Africa venture capitalists, accelerator managers, innovation faculty and serial entrepreneurs - use this information to decide which companies to feature on #YASR30. We are excited by what we are seeing in the data and we hope you will be too!