Sukna Capital's Fares Bardeesi on launching Saudi's first open-ended direct lending fund for SMEs, startups

Gulf Business

8 hours ago

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Targetting sectors such as fintech, sustainability and AI, the fund addresses a critical gap in the region's capital stack by providing structured credit solutions based on commercial traction rather than collateral alone.
The fund is being led by a seasoned team, including Fares Bardeesi, a former senior banker, and Waleed Alballaa, ex-STV founding partner and co-founder of Riyadh Angel Investors.
In this interview, the firm's CEO Fares Bardeesi outlines their investment strategy, timing, and how this fund aligns with Saudi Arabia's Vision 2030 ambitions.
Congratulations on securing regulatory approval. Can you walk us through the vision behind launching the region's first open-ended direct lending fund, and why now is the right time for such a product in Saudi Arabia?
The CMA's regulatory approval represents a pivotal moment, not just for our fund, but for the entire regional financing landscape.
We're honoured by their confidence and leadership in enabling this innovation.
Our vision is to create a new institutional pathway for yield and growth capital that reflects the realities of today's economy: digital, fast-moving, and underserved by traditional financing models.
The timing is critical. While the tech and startup ecosystem has matured significantly, financing structures have not kept pace — particularly when it comes to flexible, non-dilutive credit.
Alternative credit is necessary to support the scaling of innovative businesses, bridge liquidity gaps for VC funds, and reinforce long-term ecosystem sustainability.
How will this fund fill the existing funding gap for startups and SMEs in Saudi and the wider Middle East, particularly when it comes to non-dilutive financing options?
The regional capital stack has long been polarised — companies either dilute equity or take on rigid, collateral-heavy bank loans. Our fund introduces a third path: structured, non-dilutive capital aligned with commercial momentum, not just balance sheet size.
We underwrite based on receivables, recurring revenue, scalability potential, and real operating data — unlocking access to credit for high-growth businesses that traditional lenders often overlook or pledge against misaligned collateral. Whether it's a SaaS business bridging working capital or a VC fund managing capital call timing, we structure debt around business models — not bureaucracy.
Fintech, AI, and sustainability are mentioned as focus areas — how did you prioritise these sectors, and what criteria will guide your investment decisions within them?
They are not the only focus — we target all high-growth SMEs led by dynamic, innovative founders. Our underwriting is based on verifiable traction: recurring revenue, contract visibility, customer retention, or transaction volume.
We structure every facility around growth, governance, and repayment discipline. For example, fintech is enabling financial inclusion, AI is transforming productivity, and sustainability is becoming a strategic imperative. But these sectors are often misunderstood or incompatible with legacy credit models.
Our prioritisation reflects both institutional responsibility and market momentum.
These sectors are not just innovation-driven — they are redefining the region's economic infrastructure.
With your team's collective experience, spanning $6.5bn in transactions and early-stage VC leadership, how will this background shape the fund's approach to risk, deal structuring, and startup engagement?
Our experience gives us a dual lens that few lenders possess: credit discipline and tech fluency coupled with deep founder empathy.
We know how to structure facilities that balance investor protection with commercial flexibility, from performance-based triggers to collateralised repayment waterfalls. Just as importantly, we know how to engage early, even when companies don't yet meet traditional credit thresholds.
This allows us to design solutions across stages — whether for a venture-backed startup scaling to growth or a cash-flowing SME. Ultimately, we bring institutional standards to market segments that need both capital and partnership.
Given the open-ended structure of the fund, how do you plan to balance flexibility for borrowers with long-term returns for investors?
The open-ended structure is one of the fund's greatest strengths — and also one of its core responsibilities. It enables continuous capital raising and deployment, while offering periodic liquidity to investors.
We manage this through matched-duration lending, strong credit governance, and real-time portfolio monitoring. Each facility is structured with clear triggers, backed by assets or contractual flows, and aligned with actual business cycles.
For borrowers, this means responsive access to credit tailored to operational needs. For investors, it means exposure to income-generating, collateral-backed assets — delivered with institutional-grade oversight. It's a rare balance of flexibility and discipline, and one the market is ready for.
In what ways do you see Sukna Capital and this fund contributing to Saudi Arabia's broader goals under Vision 2030—particularly in diversifying the economy and empowering entrepreneurship?
Vision 2030 is about building an ecosystem where innovation, private capital, and entrepreneurship intersect — and that's exactly where Sukna Capital is focused.
As of Q3 2024, SME lending in Saudi Arabia stood at SAR 329.23bn — just 9.1 per cent of total bank credit — well below the Vision 2030 target of 15–20 per cent. Our fund is designed to help close that gap by introducing structured, non-dilutive financing aligned with regulatory frameworks and commercial realities.
This fund enables startups and SMEs to scale without premature equity dilution or inflexible debt. It also provides institutional investors with access to a new, income-generating asset class — deepening local markets and reducing dependency on imported capital. The fund is more than a financing solution. It's a strategic tool for economic diversification, entrepreneurship, and long-term resilience.