Can Nigerian startups embrace corporate bonds for funding?
VC vs Corporate bonds: Finding alternative funding sources for startups. Source: StearsBusiness

As we settle into 2022, African tech fundraising figures have crystallised. Last week, Partech Africa released a report on the total startup funding raised in Africa—$6 billion.

This record was nearly 4x the amount raised in 2020, a year when ecosystem fundraising decreased for the first time in nearly a decade as a result of the COVID-19 pandemic.

Some takeaways:

  • Funding in the African tech ecosystem is growing at a neck-breaking speed—2021’s growth was 3x faster than global VC investment and nearly 4x the 2020 figure.

  • Corporate bonds can be a cheaper funding alternative for founders looking to avoid or delay dilution, and startups can also diversify their investor base. 

  • Startups will likely face a significant risk premium when they issue corporate bonds because they are less transparent, less cash-rich, and riskier than traditional businesses. Specific mechanisms must be built into corporate bonds to make them feasible for Nigerian startups.


Fundraising in the tech ecosystem in Africa is growing fast—faster than global and regional venture capital (VC) investment. Last year’s growth put African tech ahead of even Latin America (LATAM) and the rest of the world. According to the report, African tech funding is growing 3x faster than global VC investment, which reached $643 billion in 2021 with a year-on-year growth rate of 92%.

​​In absolute terms, the total amount raised by African startups remains small compared to the three-digit billion-dollar figures in other regions or globally. And despite accelerated growth in fundraising, many Nigerian businesses (especially those outside tech) still struggle with raising capital to scale. It is little wonder that the 2021 FATE Foundation State of Entrepreneurship survey highlighted limited access to finance as a significant issue for Nigerian entrepreneurs.

As detailed by Partech, funding from VCs helps tech-enabled startups grow. That’s because growth costs money, and as Paul Graham—Y Combinator's famous founder—argues, "The only essential thing [for startups] is growth." With this in mind, it seems obvious that the

This story is only available to Premium subscribers Subscribe or sign in to finish reading

Not ready to subscribe? Register to read a selection of free stories

Adesola Afolabi

Adesola Afolabi

Read Latest

How Nigeria’s lawmakers enabled its fiscal crisis

PREMIUM - 03 FEB 2023

3 risks for Nigeria’s investors in 2023

PREMIUM - 02 FEB 2023

Why Nigerians abroad cannot vote during elections

PREMIUM - 01 FEB 2023

Will Ibom Power’s new license improve Akwa Ibom's electricity?

PREMIUM - 31 JAN 2023

Download our mobile app for a more immersive reading experience

Scan QR code
mobile download