El Nashar,a former head of direct investments Abu Dhabi  - Arabstoday Entrepreneurs in the Gulf region are turning to venture capital firms amid a bank funding squeeze made worse by the European sovereign debt crisis. The pace by which both new and established businesses are obtaining funds through these means is picking up after years of little growth, observers say. The number of venture capital deals done through structured funds and not direct, seed or angel investments has totalled 43 during the past three years to the end of last month. That compares with just 16 deals conducted during the previous three years, between 2006 and 2008, according to the Zawya Private Equity Monitor. "We still haven't closed the year yet, but there will probably be a few [deals] coming out in the next couple of months," says Walid Mansour, the executive director of the Mena Private Equity Association. "I know we're working on some." Part of the driving force behind the movement in this industry comes as banks continue to tighten their lending in response to a deteriorating global economic outlook. As a result, small and medium enterprises (SMEs) are increasingly having to look for alternative ways to receive funding. There is no specific published data on bank lending to the SME sector, but overall lending in the UAE increased 3 per cent in the first nine months of the year to Dh1.07trillion (US$291 billion). Personal lending, which is often the way SMEs receive financing, increased 1 per cent to Dh249.8bn in the same period, lagging both overall loan growth and the growth in the economy. "[Banks are] still nervous and keen to support small businesses, but generally any facilities offered for seed capital have to be cash-pledged," says John Martin St Valery, the founder and chief executive of Links Group, which assists entrepreneurs in setting up business in the UAE and Qatar. "What we have found is angel investors - individuals or institutions - interested in actually supporting entrepreneurial start-ups set up their own presence here for private funding. That's become more popular." Rony El Nashar,a former head of direct investments at the Khalifa Fund, recently set up a private equity fund and incubator for small businesses called SeedStartup. He received 73 applications from businesses around the world to come to Dubai to develop and receive angel funding. "To me the only thing that matters is the quality of the idea and the quality of the team," said Mr El Nashar. Companies in the UAE and Egypt have each accounted for around a quarter of the structured venture capital deals that have taken place during the past five years. Mr Mansour notes that one of the more significant changes this year is that the industry is getting "more structure around it". The National .