MENA Scaleups Turn to Debt as Equity Funding Shrinks in 2026
The region's largest 2025 financings were debt facilities, not venture rounds. With equity down 22% in early 2026, founders are rethinking how they fund growth.
The biggest cheques going to MENA scaleups no longer buy shares. They finance balance sheets, and founders who still treat funding as a ladder of lettered equity rounds may be paying far more than they need to, according to Sayed Adnan, Chief Business Officer at Graystone Capital.
The largest financing announced at Money20/20 Riyadh in September 2025 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 a year earlier. Tabby had set the regional precedent two years before that with a $700 million receivables securitisation from J.P. Morgan.
The numbers behind the shift
MAGNiTT's figure for 2025, $3.8 billion across 688 deals, counts equity only. Adding debt roughly doubles the year's capital flow to about $7.5 billion, meaning non-dilutive money matched dilutive money almost dollar for dollar.
The first half of 2026 sharpened the point. 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.
The dilution maths is stark. Selling a quarter of a company for $10 million at a $40 million post-money valuation costs $125 million if the business later exits at $500 million. Lenders might advance working capital against receivables at a mid-teens all-in rate.
Matching instrument to need
The principle is that lenders finance what they can see, measure and seize. Receivables-heavy businesses such as BNPL platforms and SME lenders suit asset-backed debt: Lendo signed a $53 million Murabaha with Jadwa, and CredibleX secured $100 million from Pollen Street Capital. Contracted recurring revenue can support revenue-based structures, trade-heavy models suit invoice discounting, and equipment belongs with leasing. Bahrain's FLOOSS funds growth through a $22 million Shorooq-backed facility.
Becoming debt-ready takes 12 to 18 months of clean cohort data, audited financials, working collections and unit economics that clear the facility's cost. Founders should raise from strength, with a year or more of runway, and watch covenants and tenors. Debt used to fund losses accelerates failure.
Shariah-compliant structures give MENA founders an edge by unlocking Gulf institutional capital. Saudi Arabia's private credit market reached $3.7 billion in 2024 after growing tenfold, and regional funds are being raised to lend against SME and fintech assets. The constraint, Adnan argues, is the number of companies structured to receive that capital.
