Why debt is becoming a bigger part of Middle East startup funding

Equity is no longer the only instrument on the table Four separate deals this period used debt or a debt-equity blend rather than pure equity, which is enough to call it a pattern rather than a one-off. Looking at what those four companies have in common — and what separates them from the month's pure-equity rounds — explains both why debt is spreading and where it is likely to spread next. For most of the last decade, a Middle East startup raise meant one thing: an equity round, priced at a valuation, diluting the founders and existing investors a little more each time. That is no longer the whole story. Several of September's largest Saudi deals used debt or debt-like structures instead of, or alongside, equity — and the reasons behind that shift say a lot about which business models are maturing fastest in the region. Where debt shows up first: balance-sheet-heavy lending The clearest example is Rize, the rent-now-pay-later proptech platform, which secured a $50 million facility from Jadwa Investment rather than raising the equivalent amount in equity. A facility like this is structured to fund the loan book or the underlying asset exposure a lending business carries — in Rize's case, the receivables tied to tenants paying rent over time — rather than to fund operating expenses. Financing the loan book with debt instead of equity means the founders are not diluting themselves to fund something that, by design, gets repaid. The $200 million SME financing programme that Lendo launched with Quantic works on similar logic at a larger scale: rather than Lendo raising $200 million in equity and then lending it out, the programme is structured to move institutional capital through Lendo's platform directly into SME credit. The capital funds loans, not company growth in the traditional venture sense, which is exactly the kind of exposure debt investors are built to hold. Where debt shows up second: growth-stage blended rounds Debt is not confined to lending platforms. Enhance, the fitness technology company, raised $18.2 million in a round explicitly split between equity and venture debt. Nayla's $18 million round for micro-business financing follows a comparable equity-and-debt structure. In both cases, the blend lets the company raise a larger total round while diluting less than a pure-equity raise of the same size would require — useful for companies that have reached enough scale and predictability to qualify for venture debt terms, but that are not looking to give up additional ownership at this stage. When debt works — and when it doesn't Debt works well for exactly the kind of businesses showing up in this list: companies with a lending book, a receivables stream, or predictable recurring revenue that can service interest payments. It works less well for pre-revenue or early product-market-fit startups, where there is no cash flow yet to service debt and where a facility would simply add repayment risk on top of execution risk. The early-stage rounds disclosed in the same period — Gaia's pre-seed and RIME's and Fitting's seed rounds among them — were reported as seed-stage rounds rather than debt facilities, which fits that pattern: at these stages, dilution is usually the more sensible trade than fixed repayment obligations. Shariah-compliant structures make debt a natural fit locally Part of why debt fits Saudi fintech specifically is that the instruments being used are built to be Shariah-compliant from the outset. The Lendo-Quantic programme, for instance, was structured as a Shariah-compliant SME financing programme, and Rize's facility is an asset-backed Murabaha facility. That distinction matters commercially: Shariah-compliant structures like Murabaha-style facilities are not a workaround imposed on Saudi lenders, they are a native financing format that Saudi banks, family offices and institutional investors already understand and are comfortable deploying at scale. That familiarity is likely accelerating how quickly debt capital is moving into the sector, compared with a market where compliant structuring would need to be built from scratch. The risk of leaning on debt too early Debt is not free of risk simply because it avoids dilution. A facility or financing programme still carries repayment obligations regardless of how a company's growth unfolds, and a lending platform that raises debt against a loan book that later underperforms — through higher-than-expected defaults, for example — carries that repayment risk directly, in a way an equity investor absorbing the same underperformance through a lower valuation does not. The structures used by Rize and Lendo appear designed with that risk in mind, tying the debt specifically to the receivables or loan book it funds rather than to the company's general operations, but the distinction between "debt matched to a specific, monitorable asset" and "debt used to plug a general funding gap" is the one that determines whether this shift stays healthy