Ifeanyi Okeleke operates at least three agribusiness firms in Nigeria, spanning cassava, palm oil, and poultry.

In 2023, he secured more than N150 million from two equity investors. The following year, he took a N250 million loan to scale up his palm oil processing operations.

“I use hybrid financing to raise sufficient capital for expansion,” said Okeke, chief executive of Kenfrancis Farms. “Sometimes equity alone isn’t enough, so we combine it with debt. That’s how we grow.”

For Matthew Debola, CEO of a Lagos-based fintech firm, grants and loans have been instrumental in sustaining his business. He said that while loans help him meet short-term needs, grants provide the stability required to pursue long-term goals.

In Nigeria’s dynamic startup ecosystem, where venture capital flows have faced global and local pressures, founders are increasingly turning to hybrid financing to drive expansion.

By combining equity investments with debt instruments, these entrepreneurs seek to address cash flow demands, inventory buildup, and infrastructure hurdles such as unreliable power and logistics disruptions.

This approach allows them to maintain control while pursuing profitability, especially in a market marked by currency fluctuations and high borrowing costs.

The shift reflects a maturing landscape. African startups raised $2.2 billion in 2024, with fintech and cleantech sectors drawing significant interest.

In Nigeria, startups secured over $100 million in the first quarter (Q1) of 2025 alone, amid broader African funding of $460 million for the quarter. Debt has played a growing role, supporting revenue-focused ventures.

Stakeholders at a Private Capital Roundtable series in 2025 emphasised how blending equity and debt could de-risk investments, making startups more attractive to lenders.

They stressed that blended structures promoted long-term viability by aligning capital with business maturity.

At the roundtable, panelists, including founders from FairMoney and Arnergy, repeatedly advised pairing blended finance with disciplined repayment track records and strong unit economics/revenue predictability to unlock better terms.

Fluxis Capital, a Lagos-based firm specialising in debt capital for tech and media startups, also reinforced this via X, sharing insights such as turning debt from a last resort into a growth catalyst and promoting hybrid models for resilient, locally-driven funding ecosystems.

This is not mere adaptation, as it is a deliberate tactic. With inflation challenges and foreign investor caution, hybrids provide non-dilutive options for immediate operations while saving equity for ambitious plans.

Joy Mabia, a venture capital support and startup visibility strategist, explained that, “Debt financing offers speed and flexibility. With equity harder to secure, debt allows founders to access capital without heavy dilution. Also, lenders are increasingly offering innovative instruments tailored to startups, such as revenue-based financing. For many, debt is becoming the bridge capital between equity rounds.”

Mabia stressed strategic use, advising that, “Debt can be sustainable if used for working capital or short-term cash flow gaps, not for long-term speculative bets.”

Given Nigeria’s forex volatility and elevated rates, she advised, “Debt carries significant risk. Founders must weigh repayment ability carefully. For many, a blended strategy: some equity, some debt, offers balance.”

Founders must clearly separate survival capital from growth capital. Debt should fund initiatives that generate predictable revenue in the near term, while equity or grants can fund longer-term innovation. The discipline here is communication, internally aligning teams around what is for today versus what is for ‘tomorrow,’ experts say.

Babatunde Akin-Moses, CEO of Sycamore, a lending platform, provided a balanced perspective on debt’s role.

“Debt has its place. In recent years, when equity was scarce, many startups turned to debt to stay afloat. Now, with equity returning, debt can complement it rather than serve as a crutch.

“The key is using it wisely. If it funds revenue-generating activities like working capital, it can be powerful. But using debt to cover operational burn is a red flag. In this environment, debt is sustainable when matched to clear, short-term returns,” he said.

Spotlighting Nigerian pioneers reveals hybrid financing’s impact. These companies have blended equity and debt since 2021, building resilient operations.

Read also: Homegrown VCs fuel fresh capital inflows into startups

Firms tapping blended finance

From 2021 to 2025, Moove the mobility fintech, raised $250 million in equity and $210 million in debt, with over $1 billion in additional debt for U.S. expansion in 2025. It has financed thousands of vehicles, supporting ride-hailing and EV growth.

In 2021, TradeDepot secured $110 million in a Series B blending equity and debt from IFC and Novastar, scaling B2B e-commerce to reach informal retailers.

In 2023, Remedial Health raised $12 million Series A funding, including $8 million equity and $4 million debt, to digitise pharmaceutical supply chains.

Similarly, from 2022 to 2024, ThriveAgric obtained $56.4 million in debt alongside prior equity, including financing inputs for smallholder farmers.

In 2024, Waza closed $8 million with $3 million seed equity from Y Combinator and other investors, plus $5 million debt from Timon Capital, enabling cross-border payments.

In 2025, Rivy (formerly PayHippo raised $4 million pre-Series A, split as $2 million equity from EchoVC and Shell’s All On, and $2 million debt from local lenders, pivoting to clean energy financing.

Also this year, Mansa secured $10 million seed, with $3 million equity from Tether and co-investors and $7 million debt facilities for liquidity in payments.

Short-term vs long-term thinking

Akin-Moses added, “Debt pushes you to think short-term, but that’s not always negative—the discipline keeps you sharp. The trick is not letting survival kill the long-term ambition. Use equity for vision, debt for execution. Equity gives the runway to innovate; debt provides fuel for today. That way, you protect both survival and the bigger picture.”