Photo: Wikimedia Commons
Saudi startups are borrowing more as the war makes equity investors cautious and the IPO market stays shut.
Venture capital invested in Saudi Arabia fell about 29% to $1 billion (SAR 3.75 billion) in the first nine months of 2026, according to MAGNiTT data cited by Bloomberg. Funding in the UAE rose almost 20% to more than $1.6 billion over the same period.
Nearly a dozen venture firms named the US-Iran war, which began in February, as a main source of uncertainty.
Who is lending
India's Stride Ventures, one of the first overseas venture debt firms to set up in the kingdom, has put about $90 million into Saudi deals in roughly a year. It plans to invest more than twice that over its first two years in Riyadh, and expects at least two more deals before year-end.
One recent loan went to BRKZ, a construction tech company backed by Aramco. "Our approach has always been to match the right type of capital to the right business need," founder and CEO Ibrahim Manna said.
Stride's Saudi push has state backing. In April, the Saudi Venture Capital Company (SVC) committed to Stride Ventures Debt Fund V.
Saudi debt crowdfunding platform Raqamyah has arranged up to $107 million this year, double its total for 2025. Lender Erad says it has received more than $1 billion in financing requests since it opened 18 months ago.
Why founders want debt
Borrowing lets founders delay equity rounds that could mean a lower valuation. Abu Dhabi-based Plus VC says investors are putting their money into later-stage deals, leaving early-stage startups with fewer equity options.
The exit route is also blocked. Saudi Arabia's market regulator hasn't approved a new main-market listing since April.
The bigger picture
The slowdown started early in the year. Saudi startups raised $219 million in the first half, down 74% from a year earlier, according to MAGNiTT's first-half report. Local money stepped in as foreign investors pulled back: domestic investors supplied 74% of funding in the half, up from 54%.
Debt is not a cure-all. A loan still has to be repaid, usually from the proceeds of a future equity round or from cash flow. That means the bet only pays off if equity markets reopen in time.
