In the Gulf, “debt” carries more baggage than in the West. It’s not just a financial term, it’s cultural, even religious. For founders, that can make the idea of borrowing to grow a lot more complicated than raising equity.

That’s why venture debt here isn’t a carbon‑copy of the Silicon Valley model. It’s being rebuilt to fit the region: Murabaha mark‑ups instead of interest, revenue‑share buybacks instead of rigid instalments, and new structures like NICE and WAQFA that keep funding both founder‑friendly and Shariah‑compliant.

This piece unpacks how non‑dilutive capital is evolving in the Gulf, from the four main structures, spanning term loans to revenue‑based financing, to the trade‑offs behind them, how venture debt works in practice, and the wave of Shariah‑compliant experimentation reshaping the market.

Many thanks to Fariha Ansari Javed, Partner at Stride Ventures, and Dunya Bashiti, Co‑founder & CEO of Capifly, for their time, insights, and valuable contributions to this piece.

A brief history lesson

For those curious about the roots of venture debt, it all traces back, perhaps unexpectedly, to semiconductors.

It began not as a flashy financing tool but as something far more prosaic: equipment leasing.

1960s – 1970s: Silicon Valley hardware era

Chip makers needed pricey fabrication gear but had no collateral or cash flow. Equipment lessors stepped in, advancing capital against the machinery itself.

1980s: The warrant twist

Two niche lenders, Equitec Financial Group and Comdisco Ventures, added equity warrants to their loans. That single tweak turned regular, plain old leasing into a hybrid: lenders now captured upside if the startup took off, not just downside protection if it didn’t. The appeal is self-evident.

1990s – 2000s: SVB mainstreams the model

Silicon Valley Bank scaled the concept, writing hundreds of term‑loan‑plus‑warrant deals. Venture debt became a staple “between rounds” funding tool for US startups.

2010s: Global export

India, Southeast Asia, and Latin America adapted the playbook to their own tech booms, layering local regulations and risk appetites on top of the SVB template.

2020s: MENA remix

Now the Gulf is putting its own stamp on the model, shaped by sovereign LPs, an asset‑light startup mix, and the need for Shariah‑compliant structures that swap interest for Murabaha mark‑ups, revenue shares, or callable equity.

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