As the Egyptian startup ecosystem transitions into a more mature phase, the challenge of scaling without excessive equity dilution has become a primary concern for founders. To address this “missing middle” in the financing landscape, GIZ Egypt and enpact have launched “Scale It Forward,” a catalytic initiative designed to introduce venture debt as a non-dilutive growth tool. By partnering with financial institutions and high-growth scaleups, the program aims to establish a resilient capital mix where equity finances risk and debt finances scale.
The Rise of Venture Debt in African Ecosystems
The shift toward debt financing is gaining significant momentum across the continent. According to a landscape study by FMO and Dalberg, venture debt accounted for 38% of venture capital deal value in 2024, a notable increase from 25% in 2022. By the third quarter of 2025, venture debt deployment reached $1.6 billion, officially surpassing equity deployment, which stood at $1.4 billion.
This trend is driven by three primary factors:
- Founder Control: 59% of surveyed founders seek debt specifically to avoid the dilution of ownership and operational control.
- Flexible Structuring: Lenders are increasingly offering revenue-backed and milestone-based instruments tailored to the unique needs of tech-enabled companies.
- Governance and Visibility: Mature ecosystems now provide the stronger governance and revenue visibility required to make debt a viable alternative to equity.
Strengthening the Startup-Lender Pipeline
The Scale It Forward program, running from January to December 2026, focuses on de-risking the lending process for both startups and financial institutions (FIs). The initiative partners with five FIs—including venture capital firms, private equity funds, and microfinance institutions—to activate specialized venture debt products.
To ensure a high-quality pipeline, the program provides:
- Tailored Capacity Support: 30 scaleups and 5 FIs receive expert guidance on financial modeling, governance, and compliance.
- Non-Repayable Funding: Each selected scaleup receives €5,000 in support to close readiness gaps and improve financial health.
- Capital Mobilization: Participating FIs commit to providing a minimum of €5,000 in venture debt per scaleup, with each institution investing in six companies.
Impact on High-Demand Sectors
By promoting venture debt as a credible instrument, the program targets high-growth sectors such as Fintech, Agri-tech, and Health-tech. This strategic approach allows founders to extend their runway and fund revenue-generating activities without the rigid collateral requirements of traditional banking. Ultimately, Scale It Forward positions Egypt as a pioneer in growth-oriented financing, enhancing the internal rate of return (IRR) for investors while preserving founder equity.
About GIZ Egypt
GIZ Egypt is a leading provider of international cooperation services for sustainable development and international education work. Operating on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), GIZ works closely with Egyptian partners to foster economic growth, employment, and innovation. Through initiatives like Scale It Forward, co-developed with enpact, GIZ supports the “Invest for Jobs” special initiative to create decent work and strengthen the local entrepreneurial ecosystem.
Source: GIZ Egypt
