STV has officially closed its US$100 million STV NICE Fund I, a non-dilutive capital fund aimed at supporting technology startups in Saudi Arabia. The fund is backed by SAB Invest’s Alternative Financing Fund, the National Technology Development Program (NTDP), and several family offices.
The STV NICE Fund I is designed to provide Sharia-compliant, non-dilutive financing to growth-stage companies, offering an alternative to equity-based funding. This structure allows startups to access crucial capital while maintaining control and ownership, a particularly important consideration in emerging markets where traditional equity financing options may be limited.
This fund serves as a key player in bridging a critical gap in startup ecosystems across emerging markets. Non-dilutive funding models, like the NICE instrument, address the tension between the need for capital and the desire for founders to retain ownership. This trend is gaining traction in regions where private credit markets are underdeveloped compared to more established economies.
Additionally, the fund’s structure exemplifies Saudi Arabia’s growing public-private partnerships that are accelerating the development of its technology ecosystem. The NTDP’s strategic backing of the STV NICE Fund aligns with Saudi Arabia’s broader Vision 2030 goals of diversifying the economy and increasing investment in technology. In 2021, venture funding in the Kingdom surged by 270%, reflecting the growing importance of such initiatives.
The NICE instrument, developed by STV, represents a hybrid financing model blending elements of debt and equity. This innovation offers flexibility for founders to access growth capital without diluting equity while providing investors with a regular income. Particularly within Sharia-compliant frameworks, this hybrid approach makes it easier to channel more capital into innovation while diversifying risk.
STV’s approach may become a model for similar funds across the MENA region, providing a template for combining public sector support and private sector expertise to foster long-term growth in tech ecosystems.
