---
title: "Nigerian Startups Shift to Debt as Equity Gets Harder"
description: "Nigerian startups are raising more debt as equity rounds slow. Founders cite stronger revenues, longer due diligence, and new local capital channels."
canonical_url: "https://liners.com/news/nigerian-startups-debt-over-equity-trend"
markdown_url: "https://liners.com/news/nigerian-startups-debt-over-equity-trend.md"
type: "article"
language: "en"
published_at: "2026-09-02T12:01:58.790Z"
updated_at: "2026-09-02T12:01:58.792Z"
---

# Nigerian Startups Shift to Debt as Equity Gets Harder

Nigerian startups are raising more debt as equity rounds slow. Founders cite stronger revenues, longer due diligence, and new local capital channels.

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## In Short
Nigerian startups are increasingly choosing debt funding over equity. The shift tracks a wider Africa trend, with debt now making up 41% of startup capital.

## What's Going On: Why Nigerian Startups Are Choosing Debt
Nigerian startups are turning to debt because equity has become harder to raise. Debt funding means borrowing money that must be repaid, usually with interest. Equity funding means selling a stake in the company.

Partech Africa data shows debt now accounts for 41% of all capital raised by African tech startups, up from 17% in 2019. Nigeria is part of the shift, although Kenya and Egypt are still larger debt markets.

Babatunde Akin-Moses, founder of [Sycamore](/sycamore), said lenders are backing startups that have predictable revenue and tighter controls. He pointed to Sycamore’s commercial paper issuance, a short-term corporate IOU sold to investors. He said institutional investors focused on business model details, financial performance, loan book quality, governance, liquidity management, and repayment ability.

Akin-Moses also warned that debt is not automatically “better” capital. If cash flow cannot comfortably cover repayments, debt can become a bigger risk than dilution.

Temitope Ekundayo, co-founder of [GetEquity](/getequity), said the equity market is still active, but it is skewing toward established, revenue-proven businesses. He said diligence that once took about eight weeks can now run six months and go deeper.

Ekundayo added that some “local equity” now behaves more like debt. He described terms like collateral, guarantees, a fast path to profitability, board seats, and personal guarantees, which resemble lender requirements even when the capital is labelled equity.

## What To Watch: Implications for Founders and Investors
More Nigerian founders may build toward debt readiness earlier, with stronger reporting, governance, and cash flow discipline. Investors may also see more structured deals with clear repayment schedules, covenants, and defined exits.

But the tradeoff is stricter scrutiny and less room for experimentation. For earlier-stage startups without steady revenue, the funding gap could widen if equity keeps moving upmarket and debt remains selective.

## Sources and products

- [Nairametrics](https://nairametrics.com/2026/09/02/why-nigerian-startups-are-turning-to-debt-over-equity)

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