In an era where it has become tougher to raise venture capital, many companies have turned to non-dilutive, revenue-based financing (RBF) as an alternative. As a result, plenty of startups have risen to meet that challenge, none more so than in the MENA region, which has taken to the model like a duck to water. The latest is CredibleX which has raised a $55 million seed financing round led by Abu Dhabi-based Further Venturesin order to take advantage of the booming market for revenue financing in the Middle East.
Providing working capital financing to small and medium-sized businesses, CredibleX operates in a market where we saw companies like MENA competitors FlapKap and Flow48 scale and raise capital in 2023, not to mention others elsewhere like Modifi (raised $353.6 million to date), Drip Capital ($528.1 million to date), and Incomlend ($25 million to date).
So what’s going on here?
With MENA SMEs (small/medium enterprises) still finding it difficult to access working capital from traditional banking channels, CredibleX has found a route to market. It partners with large aggregators and then goes after the SMEs in their vertical ecosystem.
CEO and co-founder Anand Nagaraj told TechCrunch: “We believe this approach helps us in recovering repayments easily as we have a direct relationship with the debtor/payer. Most of the others in this space work with the SMEs to try and get an assignment of receivables/sales.”
In particular, revenue-based financing works quite well for SMEs in high-income countries like the UAE, and similar countries, since it’s harder to obtain financing from so-called Development Finance Institutions, which are primarily set up to invest in projects in less economically developed countries.
How the platform works is very “MENA region,” given the explosion of platforms set up for service-based industries like restaurants, of which there are millions in MENA.
