Sycamore, a Nigerian digital lender, is raising ₦1 billion ($628,000) to complete a $1.5 million debt funding round, just one week after securing ₦1.5 billion ($943,000) debt from Cascador, a Nigerian entrepreneurship accelerator. The six-year-old company will use the capital to expand its loan book amid surging demand for credit from individuals and businesses.
The Lagos-based lender disbursed over $5.5 million in loans in 2024 and has generated over $3.5 million in revenue, with over $1.5 million earned in 2024 alone, a 115.19% year-on-year growth.
Sycamore currently serves 300,000 users through its peer-to-peer lending platform and plans to issue over 10,000 loans with the combined $1.5 million over the next year and hopes to serve an additional 5,000 to 10,000 businesses. Founded in 2019, Sycamore offers businesses working capital loans starting from ₦500,000 ($314) and could go as high as ₦20 million ($12,500).
Raising local debt allows lenders to recycle capital into higher-yielding loans, which helps scale operations and returns without diluting ownership. Casador’s debt funding is 10% cheaper than the local market rate, and with its private debt round, Sycamore can structure longer repayment terms of up to a year.
“Debt allows us to grow the loan book without giving up equity,” Babatunde Akin-Moses, Sycamore CEO, told TechCabal. “That became a priority because we saw an increase in loan demand. Our traditional method of financing wasn’t keeping up.”
Economic reforms and record inflation have caused the naira to lose 75% of its value over the past 18 months. For startups that raised capital in dollars but earn revenue in Naira, this sharp devaluation makes it significantly harder to deliver venture-scale returns in dollar terms.
Sycamore is bypassing that headache by raising in Naira, and the startup joins a growing list of Nigerian startups that have turned to the local debt market to finance their operations. Fairmoney, another Nigerian lending startup, has increasingly turned to commercial papers to finance its loan book.
“The Cascador deal was initially supposed to be $1 million. But we thought that if the Naira hits ₦2,000 to the dollar, do we really want to be repaying ₦2 billion? Eventually, we all agreed to structure the deal in Naira, and we approximated it to ₦1.5 billion,” Akin-Moses said.
If Sycamore can successfully raise ₦1 billion in the private debt market, it will join a growing group of startups turning to debt financing. In 2024, at least a third of the $3.2 billion raised by startups across the continent came from debt, with 77 debt deals in Africa, a slight 4% growth from 2023, according to Partech.
Mark your calendars! Moonshot by TechCabal is back in Lagos on October 15–16! Join Africa’s top founders, creatives & tech leaders for 2 days of keynotes, mixers & future-forward ideas. Early bird tickets now 20% off—don’t snooze! moonshot.techcabal.com.
