Egypt Ranks Third in Venture Debt Funding in MENA

Egypt came in third in venture debt funding in MENA, according to a new report by Magnitt.

It received a total of $88 million in debt funding from 2018 to 2022, and accounted for more than 27% of total deals in the region.

The most funded market was the UAE, receiving $269 million, followed by Saudi Arabia, securing $155 million during the same period.

Venture debt is emerging as an alternative to VC funding in the region, particularly as startups continue to struggle with the impact brought about by the global economic downturn. With liquidity running dry in the VC space, some startups are turning towards venture debt, taking on loans to raise capital.

“Despite operating against a backdrop of increasing global macroeconomic headwinds, the start-up ecosystem across MENA continues to attract both international and regional investors,” said Natasha Hannoun, Head of Debt at SHUAA Capital. “In 2022, the VC market deployed USD 3.2 billion in funding across 627 deals, compared with USD 2.9 billion across 679 deals in 2021. Whilst equity capital continues to play a key role, venture debt is becoming an increasingly important component of the capital stack for founders looking to fund growth.”

During 2018 to 2022, fintech startups raised 61% of all venture debt funding, accounting for 61% of total funding. The sectors that closely followed suit were transport and logistics, agriculture and e-commerce.

This year also saw the first mega transaction for venture debt in MENA, with UAE fintech startup Tabby raising $100 million, according to the report.

Other startups that received significant venture debt funding include Saudi’s TRUKKER, raising $50 million and UAE agritech startup Pure Harvest, also raising $50 million.