Advisory

One year after Silicon Valley Bank’s implosion, the venture debt market has yet to crown a new king.

When the bank, which held accounts for almost 50% of VC-backed tech and life science companies in 2022, collapsed on March 10, 2023 , the impact saw widespread financial panic among start-ups and in related markets.

Private credit market experts anticipate a $10-billion milestone within the next 12 months, citing a demand-supply imbalance in the private capex boom. Further they foresee a substantial surge, projecting the private credit market to reach $50-60 billion in the next 5 years.

Private equity funding is playing a greater role in consumer startup funding, particularly as venture capital funding dipped last year.

Among startup brands, venture capitalists typically make early investments in promising companies — or sometimes even concepts — predominately based on the potential for big growth. But private equity involves making controlling investments in more established companies and helping sustain profitability.

The venture capital (VC) sector is undergoing a transformative shift towards data-, analytics-, and AI-driven methodologies, profoundly altering the traditional paradigms of sourcing, evaluating, and managing startup investments. While not necessarily incipient, this movement, reminiscent of the algorithmic trading revolution that redefined public markets, is set to revolutionize venture capital. By 2025, data, analytics, and AI are expected to inform over 75% of VC deal analyses according to a report by Data-driven VC.

Private equity firms are increasingly raising money to buy individual companies on a deal-by-deal basis, as they struggle with a downturn in the market and investors look for ways to cut management fees. A record $31bn was deployed by “deal-by-deal” investors last year, according to data provided by private equity advisory firm Triago, defying a broader dealmaking and fundraising slump in the industry.

Need a loan for a new factory or a buyout deal, but don’t like the terms your bank is offering? There’s a $1.7 trillion industry that’s ready to help. Private credit came of age after the 2008 financial crisis as an alternative to banks at a time when regulators were clamping down on risky lending by deposit-taking institutions. Today it’s become a serious rival to mainstream lending for all kinds of businesses, from real estate firms to tech startups.

The past year and a half has not been kind to investment banks’ syndicated loan departments. Their job is to originate loans, often for leveraged buyouts, to creditworthy-ish companies and sell them on to investors, in exchange for a fee. It was lucrative business, until rates started rising. Suddenly, banks were nursing losses from “hung loans”, stillborn debt stuck on the banks’ balance sheets. As uncertainty about rates and recession stalked the banks, their loan syndication departments pulled back.

Rising stockpile of ‘dry powder’ is a sign of private capital’s growing attraction as an asset class.

The stampede of new Silicon Valley unicorns emerging into the world has thinned into a straggling herd.

Venture capital firm Cowboy Ventures recently reported that of 532 US start-ups with billion-dollar-plus valuations in 2023, 60 per cent were what it dubbed “Zirpicorns” — companies last priced between January 2020 and March 2022 when zero-interest rate policies propped up valuations.

Private equity funds last year returned the lowest amount of cash to their investors since the financial crisis 15 years ago, according to Raymond James Financial Inc., hampering buyout firms in their efforts to launch new investment vehicles. Distributions to so-called limited partners totaled 11.2% of funds’ net asset value, the lowest since 2009 and well below the 25% median figure across the last 25 years, according to the investment bank.

Maalexi, the UAE-based dynamic risk management platform for SME agri-businesses, announces the completion of a $3 million pre-Series A fund raise.

The funding round was led exclusively by Global Ventures, MENA’s leading venture capital firm, which joins existing venture capital investors Rockstart (Amsterdam) and Ankurit Capital (New Delhi).

The proceeds will be deployed by Maalexi for: (i) tech development—to enhance its full-stack platform to help SME agri-buyers procure faster, cheaper, and safer from globally placed SME sellers; and (ii) drive customer acquisition—specifically more buyers in the UAE and Saudi Arabia and to add sellers from 50+ origin countries.

Tabby, the MENA’s leading shopping and financial services app, has secured up to $700 million in receivables securitization from J.P. Morgan. The deal represents the largest asset-backed facility obtained by a fintech company in the MENA region.

In parallel to the securitization financing, Tabby has extended its Series D financing to close $250 million with participation from Hassana Investment Company. The Series D was also joined by US-based Soros Capital Management and KSA-based Saudi Venture Capital (SVC).

- ‘Buy now, pay later’ start-up eyes IPO in a few years
- Growing number of Mideast tech startups planning share sales

Saudi Arabian financial technology company Tamara, which is backed by Goldman Sachs Group Inc., has been valued at over $1 billion in its latest equity funding round.

Tamara raised $340 million from investors including Sanabil, a unit of the Saudi sovereign wealth fund, and SNB Capital, a unit of the kingdom’s largest bank, according to a statement from the fintech.

BlackRock Inc. predicts that the global private debt market will roughly double to $3.5 trillion by 2028, one of the most bullish calls to date on the growth of the industry. The money manager is forecasting that “tectonic shifts” in financial markets will spur more borrowers to seek out private funds for financing, especially as some banks pull back from lending, according to a note published on Thursday by Amanda Lynam, BlackRock’s head of macro credit research.

Central Asian fintech leader, Alif, makes its mark in the UAE with Alif Pay, providing financial services and global remittance for UAE residents. Renowned digital transformation expert, Shafique Ibrahim, takes on the role as Alif Pay’s CEO, spearheading the launch and reinforcing the platform’s innovative approach to financial solutions.

Alif Pay will be launching a series of market leading financial services, leveraging next generation technology to serve the bespoke needs of UAE residents. These include Send Now Pay Later (SNPL), a Payroll platform, Travel prepaid program, Buy Now, Pay Later (BNPL) and the Fly Now, Pay Later (FNPL) services .

Private debt platform Kilde has raised US$1.1 million in seed funding from investors including Big Sky Capital, Borderless Capital, AXL Ventures, and Algorand Foundation.

The fresh funds will help the Singapore-based firm expand its private credit offerings and develop SafeBay, its securities tokenization project.

Swing, a South Korean electric scooter and micromobility startup, announced today it has raised $24 million in a Series B round to spur its growth and expansion to Japan.

The funding was led by White Star Capital, which also invested in Berlin-based Tier Mobility, and included existing backer Hashed, among others. With the fresh capital, Swing has raised a total of approximately $33 million (40 billion KRW) since its inception in 2019.

Alif, a digital banking challenger, founded in Tajikistan in 2014, received a company valuation of over $100 million, raising $8 million in equity and $50 million in debt.

This is one of the largest funding rounds in Central Asia to date, making Alif one of the highest valued fintech startups in the region.

The total investment has been raised from its existing shareholder Jefferson Capital Holdings Limited – a UK-based investment vehicle founded by Khofiz Shakhidi.

Zurich Insurance Group has bought Bright Box HK Ltd to strengthen its expertise in connected cars, the Swiss insurer said on Friday.

Founded in 2012, Bright Box provides telematics technology that links drivers to their vehicles and the vehicles to networks of car dealers and carmakers, Zurich Insurance said, giving no financial details in its statement.