Sycamore, a Nigerian digital lending platform, is raising ₦1 billion ($628,000) to wrap up a $1.5 million debt funding round just a week after securing ₦1.5 billion ($943,000) in debt from Cascador, a local entrepreneurship accelerator. The six-year-old startup plans to use the fresh capital to expand its loan book, as demand for credit from individuals and businesses continues to surge.
Based in Lagos, Sycamore disbursed over $5.5 million in loans in 2024 alone and earned more than $3.5 million in revenue, with $1.5 million of that generated this year a 115% increase from 2023.
The company currently serves 300,000 users through its peer-to-peer lending platform. With the combined $1.5 million raise, Sycamore plans to issue over 10,000 new loans in the next year and reach an additional 5,000 to 10,000 businesses. Since launching in 2019, Sycamore has offered working capital loans to SMEs, with amounts ranging from ₦500,000 ($314) to ₦20 million ($12,500).
By raising local debt, Sycamore is aiming to recycle capital into higher-yielding loans, which supports scaling operations without giving up equity. Cascador’s debt comes with a notable advantage, it’s 10% cheaper than the prevailing local market rate and with the private debt raise, Sycamore can negotiate longer repayment terms of up to 12 months.
Like many Nigerian startups, Sycamore is navigating the realities of economic reform and record inflation. The naira has lost around 75% of its value in the past 18 months, complicating matters for startups that raised in dollars but earn in local currency. To avoid this mismatch, Sycamore is strategically raising in naira.
“The Cascador deal was initially meant to be $1 million,” Akin-Moses explained. “But we asked ourselves if the naira hits ₦2,000 to the dollar, do we really want to be repaying ₦2 billion? So we decided to structure it in naira instead, and rounded it to ₦1.5 billion.”
If Sycamore successfully raises the remaining ₦1 billion, it will join a growing group of African startups tapping into local debt markets. In 2024 alone, debt accounted for roughly a third of the $3.2 billion raised across Africa, with 77 debt deals, a modest 4% increase from 2023, according to Partech.
Startups like Fairmoney are also increasingly using commercial papers to finance lending operations. As equity becomes harder to access and currency devaluation adds pressure, local debt could become the go-to option for growth-stage African fintechs like Sycamore.