A Market Map of Venture Debt investors who invested in MENA-based startups from 2018 to 2022. The Map shows local and international investors, 5-year evolution of venture debt funding, and the top five investors by number of deals in the past five years.
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At a time of economic uncertainty, debt can be a viable alternative for startups to fuel their tank. Amid the current market cooldown and VCs being more conservative when it comes to deploying capital, venture debt has been reporting a rise. Venture debt is a type of loan offered by specialized lenders and is typically designed for early-stage companies. 2021 was a record year for this type of financing in MENA as startups secured $266M across 10 deals. While 2022 fell short by $6M in terms of funding on a year-on-year basis, it was a record year for the total number of deals as 18 transactions were closed during the year. 2022 was also the year the first MEGA deal was closed for venture debt with Tabby securing $100M in debt financing from Atalaya Capital Management and Partners for Growth (PFG).
Much of the venture debt funding has been concentrated in four geographies of the region, the UAE, KSA, Egypt, and Jordan. Over the years, the majority share of the funding and deals has gone to the UAE. Last year, the UAE accounted for over 40% of the total funding share for venture debt. In terms of leading industries, venture debt followed the venture capital trend as FinTech captured the highest share of deals between 2018 and 2022 and raised 61% of the funding over the same period. SHUAA Capital and Shorooq Partners-backed Pure Harvest landed $50M in a venture debt deal last year to secure a spot for Agriculture in the top three industries.
Partners for Growth is the most active Venture Debt investor in the region both in terms of deals and total capital deployed. The USA-based debt provider has invested $150M in four startups in the Middle Eastern region including FinTech startup Tabby, digital freight network TruKKer, work-life platform Bayzat, and E-commerce startup Opontia. In terms of investor participation in venture debt deals, over 50% of the deals were signed off by regional investors. Two of the top three investors for venture debt are MENA-based including Jordan’s Beyond Capital, and Egypt’s Contact Financial Holding.
Partners for Growth - Six Deals
Partners for Growth (PFG) is a USA-based global custom debt provider that structures loans for clients such as lines of credit/revolving loans, term loans, or convertible debt. The firm has provided venture debt to a number of startups in the MENA region including Tabby and TruKKer. PFG has deployed $150M in disclosed venture debt deals and has been a returning investor in both Bayzat and Tabby.
Beyond Capital - Three deals
Beyond Capital is seed funded $10M from USAID and created through a joint partnership between Endeavor Jordan and Silicon Badia. The Jordan-based company has participated in three venture debt deals within the geography backing the likes of Kama Local Gourmet, Amina Skincare, and Eon Aligner. Beyond Capital’s last venture debt deal was in 2020 and has participated in a number of equity deals since then.
Contact Financial Holding - Two Deals
Contact Financial Holding, a non-banking financial services provider in Egypt, is the parent company of Contact. The company is one of the players in the country’s nascent debt capital markets and provides financial solutions, including auto credit, insurance, consumer, and corporate finance. Contact Financial Holding has provided venture debt to E-commerce startups in Egypt including Trella and Carzami. The company also provided $6.5M in Line of Credit to Egypt’s HORECA caterer, OneOrder.
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