Venture Debt - Saudi Arabia | Statista Market Forecast

The country in Saudi Arabia is expected to witness a Total Capital Raised in the Venture Debt market market reaching US$30.95m by 2024.
Traditional Venture Debt is set to maintain dominance in the market with a projected market volume of US$29.70m in 2024.
In global comparison, the United States is anticipated to lead in Capital Raised, with US$22.4bn in 2024.
Saudi Arabia's Venture Debt market is gaining traction as local startups seek alternative capital raising options beyond traditional equity financing.

Definition:

The Venture Debt market refers to a form of equity and debt financing combination, which is used to finance early stage and growth stage capital-backed companies. Besides equity funding rounds, business can seek venture debt that minimizes ownership dilution and governance requirements to increase the cash runway to reach the next milestone or even provide a cushion for delays.

Structure:

The market consists of two segments:
- The Traditional Venture Debt market refers to a form of debt financing that is often provided to venture-backed companies to either buy new equipment, meet a deficiency of short-term capital, or support expansion plans.
- The Growth Venture Debt market refers to a form of debt financing that is often structured with warrants or options, which provides a rapid development stage in which businesses can support their long-term oriented growth plans.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Key players in this market are companies such as Wells Fargo and Hercules Capital.

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Venture Capital
Venture Debt funds are sponsors by governments

Saudi Arabia has seen a significant increase in the development of its Venture Debt market in recent years. This growth can be attributed to several factors, including changing customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors.

Customer preferences in Saudi Arabia have shifted towards a greater acceptance of debt financing for startups and small businesses. Traditionally, equity financing has been the preferred option for entrepreneurs seeking funding. However, the rise of Venture Debt as an alternative financing option has gained traction due to its flexibility and lower dilution of ownership.

Entrepreneurs in Saudi Arabia are now more open to leveraging debt to fuel their growth, allowing them to retain a larger stake in their companies. Trends in the market have also contributed to the development of the Venture Debt market in Saudi Arabia. The country has witnessed a surge in entrepreneurial activity, with an increasing number of startups and small businesses emerging across various industries.

This has created a demand for alternative financing options that can provide the necessary capital to fuel growth and expansion. Venture Debt offers a viable solution for these companies, allowing them to access capital quickly and efficiently. Additionally, the local special circumstances in Saudi Arabia have played a role in the growth of the Venture Debt market.

The government has been actively promoting entrepreneurship and innovation as part of its Vision 2030 initiative, which aims to diversify the economy and reduce its dependence on oil. As a result, there has been a significant increase in support for startups and small businesses, including the availability of funding options such as Venture Debt. This supportive ecosystem has created an environment conducive to the development of the Venture Debt market.

Underlying macroeconomic factors have also contributed to the growth of the Venture Debt market in Saudi Arabia. The country has a strong and stable economy, with a large pool of investable capital. This has attracted both domestic and international investors, who are keen to support the growth of startups and small businesses in the country.

Additionally, low interest rates and favorable government policies have made debt financing an attractive option for entrepreneurs, further driving the development of the Venture Debt market. In conclusion, the Venture Debt market in Saudi Arabia has experienced significant growth in recent years, driven by changing customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. As the country continues to promote entrepreneurship and diversify its economy, the Venture Debt market is expected to further expand, providing a valuable source of funding for startups and small businesses.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.