Nigerian startups are turning to debt but not everyone is ready
- Debt financing for African startups rose from 6% in 2021 to 25% in 2023.
- Startups are using debt financing to avoid excessive dilution and unfavorable equity valuations.
- Debt financing is more suitable for mature startups with predictable cash flows.
The increasing reliance on debt financing among African startups reflects a significant shift in funding strategies, highlighting the need for founders to be well-prepared and informed about the implications of taking on debt. While this approach can provide quick access to capital, it is crucial for startups to ensure they are financially stable and understand the risks involved. Further discussions could explore how startups can balance debt and equity financing to optimize their growth potential.
