Asset debts crowd out equity sales: How credit facilities are reshaping the balance sheets of fast-growing companies in the region

The nature of large cheques written to fast-growing emerging companies in the Middle East and North Africa has changed, they no longer aim to buy equity stakes but rather to lease public balance sheets. Although most founders still map their financing path as a series of successive venture-capital rounds that carve out a new slice of the ownership table at each stage, this mental model now imposes a costly real expense. The most striking example came at the Money20/20 conference in Riyadh in September 2025, where the largest announced financing was not a venture round but an asset-backed, Sharia-compliant facility of up to $2.4 billion for the platform Tamara, led by Goldman Sachs, Citi and Apollo, which refinanced a prior $500 million package and multiplied it roughly fourfold in about a year after Tabi launched that predecessor with a $700 million receivable securitization together with J.P. Morgan.

Equity is the most expensive capital in a startup’s life and it is always priced at the moment of maximum uncertainty about its future.Ownership-dilution calculations make this cost clear; when a company raises $10 million at a $40 million post-money valuation, it has sold a quarter of its equity, and if it later exits for $500 million, the cost of that financing round is $125 million, a hefty price the founder pays to fund working capital that a lender could have provided against receivables at a mid-teens interest margin. Accordingly, financial logic dictates confining equity financing to where real uncertainty resides: bets on new products, expansion into untested markets, building emerging teams, and avoiding entirely the financing of inventory, invoices or stable recurring receivables.

Recent regional data reflect this shift even though it is absent from the usual promotional narrative. Magnete’s 2025 data, which recorded $3.8 billion across 688 deals, covered only equity rounds; when credit financing and debt are added, the region’s actual capital flow doubles to about $7.5 billion, with the Tamara facility representing the largest single component, bringing undiluted equity capital almost equal to diluted equity capital on a one-for-one basis. The first half of 2026 turned this lesson into an operational necessity after equity financing fell 22 percent year-over-year to $1.35 billion, international investors cut their capital deployments by roughly two-thirds, while local investors contributed 81 percent of total venture capital, the highest local share recorded in five years.

The choice of financing tool depends on the activity’s nature, as credit providers fund what they can see, measure and seize in default. Companies that generate large receivable streams, such as buy-now-pay-later platforms, small-business lending and B2B commerce markets, rely on assets that can be financed directly; consequently, Saudi platform Lendo executed a $53 million Murabaha with Jadwa to fund small enterprises, UAE-based Credable X secured a $100 million facility from Boulevard Capital, and Bahrain’s Flous adopted a $22 million consumer-finance facility backed by Shorouq, alongside a trend of regional banks and funds addressing the Gulf’s estimated $250 billion credit gap for small and medium-sized enterprises.

The credit investor does not fund theoretical visions; its focus is on auditing operational data and collection records.In practice, this means finance teams and founders in the Gulf, Egypt and the Levant must restructure treasury functions to become borrowing-ready; entering this market requires a clean performance record for client segments spanning 12 to 18 months, audited financial statements, effective collection systems, and unit profit margins that comfortably cover the facility cost. The founder’s fundamental financing decision also shifts: credit facilities are not a last-resort lifeline to extend runway when equity rounds falter, because lending terms and amortization schedules do not account for product-development roadmaps, and debt used to cover operating losses rather than fund assets accelerates financial collapse rather than postponing it.

The emerging companies that will shape the next contract will not necessarily be the most prolific in raising rounds, but those whose founders retain an equity stake that makes their journey worthwhile at exit.The region also enjoys a unique structural advantage that supports this trend; the deepest Gulf liquidity pools are now concentrated in Sharia-compliant financial tools such as Murabaha and asset-backed receivable facilities, modalities that open institutional capital doors never reached by traditional venture debt. With Saudi private-credit market reaching $3.7 billion in 2024 after a ten-fold expansion, and the creation of regional funds dedicated to lending against fintech and small-enterprise asset guarantees, the operational challenge lies in the scarcity of companies prepared and designed to absorb these tiered financing structures.