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.