Nigerian digital lender Sycamore is in the process of raising ₦1 billion (approximately $628,000) to complete a $1.5 million debt funding round aimed at scaling its credit operations. The fresh capital raise comes just a week after the startup secured ₦1.5 billion ($943,000) from Cascador, a Nigerian entrepreneurship accelerator. With demand for credit rising sharply across Nigeria, Sycamore is turning to local debt to expand its loan book without diluting equity.
Loan Demand Spurs Shift Toward Local Debt Markets
Founded in 2019 and headquartered in Lagos, Sycamore operates a peer-to-peer lending platform that has already served over 300,000 users. The company has seen rising loan demand from both individuals and small businesses, prompting the need for new capital to maintain momentum. According to CEO Babatunde Akin-Moses, the shift to local debt became necessary when traditional funding sources could no longer keep pace with customer needs.
Record Disbursements and Revenue Growth in 2024
In 2024 alone, Sycamore disbursed more than $5.5 million in loans, generating over $1.5 million in revenue—a 115.19% increase year-over-year. Total revenue to date exceeds $3.5 million, underscoring the company’s strong financial performance in Nigeria’s evolving fintech landscape. The firm now aims to issue over 10,000 loans over the next year using the combined $1.5 million in debt.
Naira-Denominated Debt Offers Strategic Advantage
Raising debt in local currency gives Sycamore a strategic advantage in Nigeria’s volatile macroeconomic environment, which has seen the naira lose 75% of its value over the past 18 months. As Akin-Moses explained to TechCabal, financing in Naira avoids the risks of currency depreciation that many dollar-backed startups now face. The deal with Cascador, originally intended to be dollar-denominated, was ultimately structured in Naira to mitigate future repayment burdens.
Favorable Terms Enable Long-Term Lending Strategy
Cascador’s loan is 10% cheaper than market rates and allows for longer repayment terms, up to 12 months, helping Sycamore align repayment schedules with its customers’ cash flows. This structure enables the lender to recycle capital more effectively, extending working capital loans ranging from ₦500,000 ($314) to ₦20 million ($12,500) to Nigerian businesses. The flexibility in terms is critical as Sycamore looks to onboard an additional 5,000 to 10,000 businesses in the coming year.
Part of a Broader Shift Toward Debt Financing in Africa
Sycamore’s move reflects a growing trend among African startups turning to debt markets to support operations without surrendering equity. According to Partech, one-third of the $3.2 billion raised by African startups in 2024 came through debt, with 77 debt deals completed across the continent—a 4% increase from 2023. Fellow Nigerian lender Fairmoney has also ramped up the use of commercial papers to finance its credit activities.
Local Market Conditions Encourage Pragmatic Capital Strategy
Nigeria’s economic reforms and inflation have forced startups to rethink how they structure funding, especially those with dollar-denominated obligations. The decision to raise in Naira provides Sycamore with insulation from foreign exchange volatility while maintaining operational agility. As Akin-Moses noted, the company had to consider the practical impact of currency fluctuations, especially with the Naira approaching ₦2,000 to the dollar.
If successful in securing the final ₦1 billion, Sycamore will have fully completed its $1.5 million debt round—a significant milestone in its growth journey. The move not only reinforces the company’s commitment to local market dynamics but also highlights the maturing approach Nigerian startups are taking toward capital raising. As local debt gains traction, Sycamore’s strategy could become a model for sustainable scaling in Nigeria’s fintech ecosystem.