Homegrown startups received significantly less venture debt in 2023: Venture debt (VD) handed out to local startups dropped 86% y-o-y in 2023 to USD 4 mn, according to a Magnitt report. The country witnessed two venture debt transactions during the year, a 75% drop compared to 2022.

Despite the drop, Egypt kept its ranking as the third market for venture debt in the region: VD activity in 2023 was concentrated in Saudi Arabia, the UAE, and Egypt, which together accounted for 92% of MENA’s venture capital funding.

Venture debt is gaining traction across the region: The ratio of VD financing to equity financing for startups soared to 28% in 2023 from 1.4% in 2020. MENA raked in a record USD 757 mn in venture debt last year, marking a 262% increase compared to 2022.

SOUND SMART: Venture debt is a type of lending offered by banks and NBFS specifically for early-stage startups with venture capital backing. We have everything you need to know about venture debt in an explainer published a couple of years back.

FinTech startups drove the growth, accounting for 79% of MENA's total VD lending in 2023, up from 68% a year earlier, owed in large to Emirati buy now, pay later firm Tabby and Saudi BNPL platform Tamara, which together raked in USD 600 mn of the total USD 601 mn financing for fintech players. Transport and logistics followed with USD 150 mn, and e-commerce had a seat at the table with USD 3 mn.

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