In MENA, revenue-based financing businesses are still raising money because the strategy just works

 In today’s challenging environment for raising venture capital, many companies are turning to non-dilutive financing models, particularly revenue-based financing (RBF), as an alternative. This trend has seen significant adoption, especially in the MENA region, where startups have quickly embraced this approach. A prime example is CredibleX, which has secured a $55 million seed funding round led by Abu Dhabi-based Further Ventures, capitalizing on the growing demand for revenue-based financing in the Middle East.

CredibleX focuses on providing working capital financing to small and medium-sized enterprises (SMEs), addressing a gap created by traditional banking systems that have been slow to meet the capital needs of these businesses. Companies like MENA-based FlapKap and Flow48, as well as global players like Modifi, Drip Capital, and Incomlend, have all successfully raised capital through similar models, reinforcing the effectiveness of revenue-based financing.

So, what is driving this trend?

In MENA, where SMEs often face difficulties accessing working capital from traditional sources, CredibleX has carved out a niche by partnering with large aggregators and targeting SMEs within their specific industry ecosystems. As CEO Anand Nagaraj explained to TechCrunch, this approach helps ensure smoother repayment processes, as CredibleX maintains direct relationships with debtors rather than simply seeking receivable assignments from SMEs.

Revenue-based financing, in particular, proves beneficial for SMEs operating in high-income countries like the UAE, where access to Development Finance Institutions—designed to support less developed economies—is limited.

The platform operates seamlessly within MENA’s service-based industries, particularly in sectors like restaurants, where the proliferation of delivery platforms like Talabat highlights the need for RBF solutions. For instance, a restaurant wanting access to RBF can apply for a loan via the Talabat platform integrated with CredibleX, submitting its historical sales data and ratings. CredibleX then makes a credit decision, typically within 24 hours, with repayments facilitated directly through Talabat, which has similar partnerships with other service platforms.

Since launching in March 2024, CredibleX claims to have distributed over AED 100 million (approximately $27 million) in loans to SMEs. Nagaraj, who previously worked at Citi and founded Invoice Bazaar, a supply chain finance platform, brings extensive experience to the team. Following the sale of Invoice Bazaar in 2021, Nagaraj, along with co-founders Ahmad Malik and Hassan Reda, launched CredibleX, further enhancing their approach to revenue-based financing.

Nagaraj emphasized that CredibleX’s model allows for a broader SME reach and provides greater security in repayment, especially when working within aggregated ecosystems. The company is fully regulated by FSRA at Abu Dhabi Global Markets.

The seed funding round includes equity from Further Ventures and debt financing from providers like Kilgour Williams Capital, backed by LPs including ADQ and Mastercard.