Saudi startups are increasingly using debt financing as equity fundraising slows, prompting founders to seek alternative sources of capital, according to a Bloomberg report.
Stride Ventures, one of the early venture debt providers to enter Saudi Arabia, has committed around $90M to deals in the kingdom since entering the market about a year ago. The firm expects to deploy more than twice that amount during its first two years in Riyadh, according to the report.
The shift comes as Saudi Arabia’s venture capital market loses momentum. Startup funding fell 29% to $1B during the first nine months of 2026, according to Magnitt data. By comparison, funding in the UAE rose 20% to more than $1.6B during the same period.
Founders are using debt to finance expansion while delaying equity rounds and limiting dilution, while smaller companies are seeking alternatives to traditional bank loans. Stride partner Fariha Ansari said startups are increasingly combining debt with their next equity round rather than treating it as a backup option.
Saudi debt crowdfunding platform Raqami facilitated $107M in financing this year, twice its 2025 total. Alternative finance company Erad has received funding requests exceeding $1B since launching 18 months ago.
Construction technology startup BRKZ, which recently secured a Stride deal, views debt as complementary to equity and says it matches capital type to business needs.
Source: Al Jazeera
