StartupsNov 4, 2026, 7:55 AM UTC·2 min read

MENA Scaleups Turn to Debt as Equity Funding Falls 22%

The largest cheques going to MENA scaleups no longer buy shares. Tamara's $2.4 billion facility shows why founders are rethinking their capital stack.

Founders reviewing financing charts in a Riyadh office, with a city skyline behind them representing MENA scaleup funding. — Image: wamda.com

SUMO

Dialo

ediviewer

The biggest financing deals in MENA tech no longer involve selling equity. At Money20/20 Riyadh in September 2025, the largest announcement was Tamara's Shariah-compliant asset-backed facility of up to $2.4 billion, anchored by Goldman Sachs, Citi and Apollo. It refinanced and quadrupled a $500 million package arranged about a year earlier. Tabby set the precedent two years before that with a $700 million receivables securitisation from J.P. Morgan, a first for the region.

Equity is the costliest capital

The dilution maths is stark. Raise $10 million at a $40 million post-money valuation and you sell a quarter of the company. If it exits at $500 million, that round costs $125 million, a steep price for working capital a lender might advance against receivables at a mid-teens all-in rate.

The regional numbers back this up. MAGNiTT's figure of $3.8 billion across 688 deals in 2025 counts equity only. Adding debt roughly doubles the true capital flow to about $7.5 billion, with non-dilutive money matching dilutive almost dollar for dollar. In the first half of 2026, equity funding fell 22% year over year to $1.35 billion, international investors cut deployment by nearly two-thirds, and local investors supplied 81% of venture capital, their highest share in five years.

Matching instruments to needs

The guiding principle is that lenders finance what they can see, measure and seize. Receivables-heavy models such as buy now, pay later, SME lending and B2B marketplaces suit debt: Lendo signed a $53 million Murabaha with Jadwa, CredibleX secured $100 million from Pollen Street Capital, and Bahrain's FLOOSS funds growth through a $22 million Shorooq-backed facility. Contracted recurring revenue can be financed through revenue-based structures, while equipment and fleets suit leasing and term debt.

Becoming debt-ready takes 12 to 18 months of clean cohort data, receivables ageing on demand, audited financials, working collections and unit economics that clear the facility's cost. Founders should raise from strength, read covenants carefully, and avoid facilities shorter than the assets they fund. Debt used to cover losses accelerates failure.

Shariah-compliant structures open Gulf institutional capital, and Saudi Arabia's private credit market reached $3.7 billion in 2024 after growing tenfold. The constraint, the author argues, is the number of companies structured to receive it. Equity remains right for genuine bets; debt should fund the machine.