RIYADH: Saudi Arabia’s startup ecosystem is increasingly turning to venture debt and private credit as Vision 2030 deepens capital markets and broadens financing options beyond traditional equity funding. 

Government-backed initiatives, fintech innovation, and rising private-sector participation are helping create a more sophisticated funding landscape, where startups are combining equity, venture debt, and hybrid financing structures to support growth while limiting dilution. 

Saudi Arabia attracted around $5 billion in startup funding across 211 deals in 2025, making it the region’s most active venture capital market, according to Wamda’s 2025 MENA Venture Investment Report. 

Funding landscape evolves

Vision 2030 has significantly expanded the Kingdom’s startup and investment landscape, with financing structures evolving alongside that growth. 

According to Georges Kakos, partner at PwC Middle East, government, semi-government, and non-bank initiatives have strengthened the ecosystem through incentives, fintech solutions, and the expansion of private credit markets.  

“What we are seeing now is the evolution of the capital stack in Saudi Arabia. Businesses are no longer relying on a single funding route, but are combining equity, venture debt, private credit and other solutions depending on their stage of development and operational needs,” Kakos told Arab News. 

“This mix of funding sources is becoming both a strategic advantage and a risk mitigant as the Saudi investment landscape continues to expand,” he added. 

Kakos said founders are becoming more strategic in their approach to capital, increasingly using venture debt and other financing tools to support growth while maintaining flexibility and balanced ownership structures.  

Founders seek flexibility

Founders are exploring a wider mix of financing options depending on their business model, operational needs and future direction, rather than relying on equity alone. 

“Many startups across sectors such as fintech, SaaS, logistics and digital marketplaces now have stronger revenue visibility and clearer operating strategies, making alternative funding solutions like venture debt increasingly practical,” Kakos said. 

“At the same time, founders are becoming more conscious of dilution and are looking for ways to finance expansion without giving away significant ownership too early,” he added. 

Kakos noted that venture debt is increasingly being used to bridge funding rounds and help startups scale toward higher valuation milestones. 

He added that broader financing options would continue supporting innovation, entrepreneurship, and private-sector growth as Vision 2030 advances. 

Risks and opportunities

PwC said venture debt provides startups with greater financing flexibility while offering investors more structured exposure to high-growth firms. However, the model also requires disciplined cash-flow management and strong repayment capacity. 

“This shift signals that Saudi Arabia’s capital markets are becoming more sophisticated and capable of supporting businesses through different stages of development,” Kakos said. 

“The market is no longer centered around a limited number of funding routes, and that is creating a more dynamic environment for both founders and investors,” he added. 

Many founders are now looking for financing solutions that allow them to grow while preserving ownership and limiting dilution.

Sharaf Sharaf, fund head at Amplify

Kakos said the next phase of Vision 2030 would further strengthen innovation and entrepreneurship while reinforcing Saudi Arabia’s position as a globally competitive economy.

Nuwa Capital said venture debt is becoming an increasingly important part of the Kingdom’s evolving capital ecosystem, particularly for startups with predictable cash flows and scalable business models. 

In an interview with Arab News, Stephanie Nour Prince, partner at Nuwa Capital and chairperson of the Middle East Venture Capital Association, said debt financing is most effective when used to scale proven business economics rather than extend cash runway. 

“The companies that have used it best regionally, like Tabby, Tamara, erad, have done so to scale unit economics that were already proven, rather than to extend runway in lieu of equity. That is the right use case,” Prince told Arab News. 

She added: “For our portfolio, we view debt as an instrument that compounds returns on the equity we have already deployed: it lets companies finance the parts of the business that should not be funded by venture dollars in the first place.” 

Prince said the market still lacks a sufficient number of dedicated venture debt providers, limiting broader adoption across the region. 

“The constraint today, however, is supply. There is still no critical mass of dedicated venture debt providers in the Kingdom or regionally, for that matter,” she said. 

She added that founders today are far more informed about when debt financing makes strategic sense, driven by improving market awareness and greater financial discipline. 

“We see this most clearly in companies with revenue visibility, where debt is now part of the conversation alongside the next equity round rather than a fallback,” Prince said. 

She also highlighted the importance of regulatory clarity and faster approval processes to accelerate growth across Saudi Arabia’s startup ecosystem. 

There is still no critical mass of dedicated venture debt providers in the Kingdom or regionally.

Stephanie Nour Prince, chairperson of the Middle East Venture Capital Association

“The direction of travel is evidently and unambiguously right, and the work being done is serious,” she said. 

“The pace at which licensing regimes, fund structuring rules, and sector-specific frameworks are settling will determine how quickly the next cohort of operators and capital allocators can move,” Prince added. 

Prince noted that founders in regulated sectors still spend significant time navigating evolving frameworks, but said greater regulatory maturity would help accelerate both company formation and capital deployment. 

She also said Nuwa Capital is entering a new growth phase, with Fund I progressing through follow-ons and early exits, while Fund II continues to build its portfolio across the Gulf Cooperation Council. 

Amplify Growth Fund, a DFSA-registered fund managed by Ajeej Capital Ltd. and advised by Nuwa Capital, said growth debt is becoming increasingly relevant as Saudi Arabia’s startup ecosystem matures. 

“We provide structured growth capital to technology-driven companies across the GCC that have moved beyond the early startup phase and are scaling proven business models,” Sharaf Sharaf, fund head at Amplify, told Arab News. 

He said many founders are now seeking financing solutions that support expansion while preserving ownership and minimizing dilution. 

“Venture capital helped build a generation of innovative companies, but many founders are now looking for financing solutions that allow them to grow while preserving ownership and limiting dilution,” Sharaf said. 

He added that growth debt is particularly suited to companies with strong unit economics, predictable revenue growth, and disciplined management teams. 

The fund head said growth debt is becoming increasingly attractive for fintech, SaaS, and technology-enabled businesses seeking more efficient ways to fund expansion. 

“Raqamyah, one of our Saudi portfolio companies, is a good example — a regulated P2P crowdfunding platform using our facility to expand its lending operations in a more efficient way,” he said. 

Sharaf added that stronger regulatory alignment across GCC markets would accelerate private credit growth and improve cross-border capital flows. 

Amplify Growth Fund is currently expanding its pipeline across Saudi Arabia and the wider GCC, focusing on fintech, SaaS, and technology-enabled businesses requiring structured growth capital beyond the early startup stage. 

The firm said its strategy is centered on meeting rising demand for institutional-quality growth capital while positioning private credit as a complementary layer to venture capital across the region’s innovation economy.