MENA Sees Surge in Venture Capital Deals

The venture capital situation across Emerging Venture Markets in 2025 told a mixed story, with several regions struggling with slower deal flow and reduced funding, while the MENA region quietly moved in the opposite direction.

According to MAGNiTT’s FY 2025 State of Venture Capital in Emerging Venture Markets Report, MENA stood out as the exception in a year marked by rising mergers and acquisitions, growing interest in artificial intelligence, and shifting global capital flows.

MAGNiTT CEO Philip Bahoshy noted that although many emerging markets experienced contraction, MENA expanded its share of total EVM funding, increasingly positioning itself as a destination for global private capital, drawing investors from across regions rather than relying solely on local funding pools.

In 2025, total venture funding in MENA reached US$3.8 billion across 688 deals, the highest deal count among all emerging venture markets, and marked the first time MENA surpassed Southeast Asia in total transactions.

Funding in the region grew by 74 percent year-on-year, while deal activity increased by 6 percent, with one of the more notable trends being the growth in large late-stage investments, as MEGA rounds rose by 82 percent, reaching a record US$1.04 billion, pointing to growing confidence in more mature startups.

Several factors helped strengthen the region’s private capital ecosystem, including expanded sovereign-backed investment programs, stronger diplomatic and trade relationships, and rising interest from international investors.

Within the region, Saudi Arabia and the UAE continued to anchor venture activity, with Saudi Arabia raising US$1.72 billion in 2025, more than doubling its funding levels from the previous year, supported by stronger participation from local venture firms and a sharp increase in international investors.

The UAE followed closely, raising US$1.58 billion, with capital inflows into the country growing by 67 percent compared to 2024, driven by a mix of later-stage MEGA deals and continued activity at earlier stages.

Together, the two markets reinforced MENA’s role as a key hub for startups looking to scale within the region and beyond.

FinTech remained the backbone of venture capital activity in MENA, raising US$1.15 billion across 178 deals, with companies such as Alaan, Nymcard, Tabby, and HALA contributing to the sector’s strong performance.

Artificial intelligence began to take on a more visible role in the region’s funding story, with startups like The Applied AI Company and Ula.ME reflecting growing investor interest in AI-driven business models.

While AI has yet to overtake FinTech in scale, its presence in growth-stage funding suggests it may become a more prominent sector in the years ahead.

Nearly half — 48 percent — of venture capital deployed during the year came from international sources, up from 44 percent in 2024, marking a record level of cross-border participation.

For several years, limited exit opportunities have been a concern for MENA’s venture ecosystem, but in 2025, signs of improvement began to emerge, with M&A activity increasing by 41 percent year-on-year, indicating a gradual shift toward capital recycling and better liquidity options for investors and founders.

Regulatory developments may further support this trend, with Saudi Arabia’s Capital Market Authority recently announcing plans to expand non-resident investor access to Tadawul, a move expected to make IPOs a more realistic exit option for growth-stage startups.

MAGNiTT expects 2026 to bring more exits through both M&A and IPOs, alongside continued interest from global startups setting up operations in the region to access new markets, as the region’s unique position at the crossroads of Europe, Asia, and Africa continues to attract investors and entrepreneurs alike.