What is Venture Debt?

Venture debt is a type of debt financing obtained by early-stage companies and startups. This type of debt financing is typically used as a complementary method to equity venture financing and potentially combined with warrants for company stock.

The 2021 MENA Venture Debt Sentiment Report, powered by SHUAA Capital

With the support of SHUAA Capital, we at MAGNiTT attempted to gauge the current perception and consideration of the usage of Venture Debt as a financing instrument. The 2021 MENA Venture Debt Sentiment Report sheds light on the state of Venture Debt in the region, as gathered in an extensive survey taken by over 100 respondents.

The survey respondents comprised of 40 regional and international VC investors and 70 MENA-based startup founders.

 

Key Report Findings

The report particularly focused on three areas: familiarity with Venture Debt, existing and future appetite for the financing instrument, and key considerations when raising funds.

  • The survey found that 94% of respondents were aware of Venture Debt, with 49% claiming to have a strong understanding of the tool.

 
  • In terms of the existing employment of the tool, the report revealed that 74% of investors had at least one portfolio company that raised a round of Venture Debt. Amongst startups, 31% of founders said they had raised Venture Debt in the past.

 

  • Looking ahead, 80% of respondents expressed their intent to use venture debt in the near future.

 

  • Both investors and startup founders ranked ‘cost of debt’ as the most influential factor when considering venture debt.

 

 


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