Abu Dhabi-based Shorooq Partners has unveiled a new venture debt fund

Abu Dhabi-based Shorooq Partners has unveiled a new venture debt fund 

By: Abu Dhabi SME Hub
News

The Nahda Fund 1 will invest in MENA region startups.

Abu Dhabi early-stage venture capital firm Shorooq Partners has unveiled a new venture debt fund, Nahda Fund 1, in partnership with South Korea’s IMM Investment Global, the UAE company revealed in a conversation with The National.

The Fund will invest in MENA region startups.

“The fund has already committed a majority of its capital including its investment into Pure Harvest, an AgTech company revolutionising the region’s agriculture with climate-controlled smart farms,” Shorooq Partners said. “The overwhelming amount of interest shown by founders towards the fund proves venture debt has been a long time in coming to the region.”

Earlier this week, Pure Harvest signed a Memorandum of Understanding (MoU) with Ericsson and du to deploy innovative 5G smart farming solutions across agricultural sites in Al Ain.

Venture lending in the region comes amid a rise in start-ups across the MENA region, following a lull during the early stages of the COVID-19 pandemic, The National noted.

Venture lending or venture debt complements traditional venture equity financing and provides founders with a “non-dilutive” means of financing that requires little to no equity stakes to raise funds, according to the company.

A long-standing form of venture investment in the US and Europe, venture debt has recently surged in emerging markets such as India, China and South-East Asia but has yet to be properly utilised in the MENA region, the company said.

“Once a start-up reaches a certain stage, it becomes very expensive to solely rely on equity financing for continued growth,” said Shorooq’s partner Samir Yamani. “With a relatively stable cash flow, utilising debt for routine expenditures such as working capital leads to a more optimal capital structure.”

Apart from Pure Harvest, Shorooq’s portfolio consists of robo-advisory platform Sarwa, digital freight company TruKKer, Lean, Capiter and Retailo.

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