Law firm, The New Practice (TNP), has urged Nigerian startups to rethink their approach to scaling by embracing debt as a viable growth tool.
The firm made the case during a roundtable held at its Lagos headquarters, themed “Scaling Smarter: Debt Markets as a Growth Catalyst for Startups.”
Financial experts at the roundtable, led by TNP Partner, Bukola Bankole, dissected why debt is now a better alternative to equity for Nigerian startups, noting that debt forces startup founders to stay alert, responsible, and more financially disciplined.
The discussion came amid a recent revelation that most startup founders lack adequate information about what it takes to list on the NGX.
A standout moment came from Seyi Ebenezer, CEO of Payaza Africa, who offered a firsthand account of building a fast-growing fintech through disciplined debt usage rather than equity.
“We looked at the prospects and said to ourselves that this thing can work on a debt level,” he said.
He argued that discipline, not intelligence, is the core of successful business management. “Disciplined people supervise smart people,” he noted.
Linking this philosophy to the nature of debt, Ebenezer said debt enforces structure and accountability.
“When people are in debt, they become disciplined,” he said, noting that interest accrues daily, even on weekends, forcing founders to stay focused.
He stressed that debt compels founders to plan, meet timelines, and maintain financial hygiene, creating a foundation for sustainable growth.
Experts at the meeting also discussed the rising accessibility of commercial papers—historically a financing tool reserved for Nigeria’s largest corporates but now increasingly used by mid-sized and emerging companies.
“Today, we have a regulator who supports the market more than I do as a market operator. That’s a material statement,” Popoola said, praising the Securities and Exchange Commission (SEC) for lowering barriers and enabling broader participation.
While emphasizing that all entry barriers to the capital market have been removed, Popoola harped on the need for proper disclosure by any company or startup coming to the market.
“The reality is you really can’t run away from disclosure in our ecosystem, and rightly so. As long as you want to get money from people, then you must be ready to disclose information,” Popoola said.
“One of the things that we’re also trying to do as a business is a lot more education because today, the traditional people who run capital markets will ask you one or two questions typically: Where are my dividends? Where is the interest? In reality, for this world of startups, it’s not a question that you can answer fairly easily,” he added.
He, however, noted that these questions targeted towards disclosures should not scare any responsible startup that wants to raise money from the market.
He, however, noted that these questions targeted towards disclosures should not scare any responsible startup that wants to raise money from the market.
A recent report by TLP Advisory had cited regulatory barriers as one of the issues preventing Nigeria’s high-growth startups from listing on the Nigerian Exchange (NGX), despite efforts to attract tech companies through the launch of the NGX Technology Board in 2022.