Sunday, July 21, 2024
Editor's PickSaudi tech VC fund to utilize new Shariah compliant non-dilutive venture debt...

Saudi tech VC fund to utilize new Shariah compliant non-dilutive venture debt instrument to support start-ups

Saudi Technology Venture (STV), the largest technology venture capital (VC) fund in the Middle East, has launched its Total Growth platform, which will utilize a newly developed product named Tanami that will act as a Shariah compliant non-dilutive venture debt instrument.

According to STV, the new Tanami instrument is expected to play a key role in the development of the region’s technology ecosystem and finance many rapidly growing companies within the next three years.

“We look to double down on our mission with STV Total Growth, a unique debt and equity funding platform, that leverages our deep market access and compounding knowledge to fuel technology growth across the region,” STV CEO and Founder Abdulrahman Tarabzouni said in a statement.

Non-dilutive venture debt instrument refers to a type of loan that is designed specifically for early-stage, high-growth start-ups with VC backing and where the funding does not require the recipient to give up equity in their company.

The STV Total Growth platform, supported by Saudi Arabia’s National Technology Development Program, was launched at the LEAP 23 Conference in Riyadh, receiving over US$150 million in initial funding, with an aim to contribute to making the Kingdom a global leader in technology.

According to Abdulrahman, the fund is meant to support start-ups expand globally and help them to achieve unicorn status, by utilizing a comprehensive suite of funding instruments — both equity and debt — to fuel growth-stage technology companies in the region. “We are excited to enter this new chapter at STV. Over the past five years, we have invested in great founders and their companies, many of which have grown to become champions of their sectors,” he said.

STV, which was founded in 2018, started out with a US$500 million investment from Saudi Telecom Company, the Kingdom’s biggest mobile operator. So far, it has raised US$1.5 billion in capital, attracted US$600 million in foreign direct investments and invested in a portfolio of 30 start-ups, two of which have achieved unicorn status.

Most recently, STV in January 2023 co-led with Sequoia Capital India a US$58 million Series C round in Tabby, a Shariah compliant Buy Now Pay Later platform. STV has been the backer of Tabby since its Series A round in 2020, and this round was joined by a blend of new and existing investors including notably PayPal Ventures, Mubadala Investment Capital, Arbor Ventures and Endeavor Catalyst.

In December 2022, STV also co-led alongside Wa’ed Venture, the VC arm of Saudi Aramco, a US$28 million Series A investment round in Manafa, a new Saudi fintech company that offers debt and equity financing based on a crowdfunding model to SMEs.

STV projected in a recent report that the MENA region is poised to output 45 unicorns by 2030.

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