Venture capital activity in the Middle East and North Africa (MENA) surged in Q1 2025, reaching its highest level since the end of 2023. This uptick was supported by improved investor sentiment following regional interest rate cuts.
Startups across the region secured $678 million in funding during the quarter, with a noticeable rise in median deal size—indicating larger capital flows toward more mature startups, according to data from Magnitt.
Saudi Arabia emerged as the leading VC investment destination in MENA and topped the global list among emerging markets, attracting $391 million in capital. The UAE followed, securing approximately half that amount.
While emerging markets globally faced a decline in fundraising activity, the MENA region remained resilient. Magnitt attributes this strength to the active role of sovereign wealth funds and high-profile ecosystem events in Riyadh and Dubai. However, this momentum faces risks due to growing global uncertainty stemming from new U.S. trade tariffs and weakening oil prices—factors that could affect investment decisions at major funds like Saudi Arabia’s Public Investment Fund (PIF).
Philip Bahoshy, CEO and founder of Magnitt, noted that such macroeconomic uncertainty could hinder capital deployment by limited partners, delay venture capital decision-making, and reduce startups’ fundraising capacity.
Despite these headwinds, the region remains well-positioned for sustained growth, supported by strong local capital bases and favorable government policies that promote entrepreneurship. Bahoshy added that tech-driven sectors are likely to continue attracting investment.
Fintech led MENA’s venture capital activity, accounting for 57% of total capital raised in Q1, driven by Tabby’s $160 million round in Saudi Arabia. Enterprise software and edtech also showed strong momentum, while e-commerce and retail sectors saw a slowdown.
Key investors during the period included Blue Pool Capital, Wellington Management, and Saudi-based STV and Hassana Investment Co.
In parallel, the Middle East and Africa experienced a record quarter for mergers and acquisitions. Regional deal volume more than doubled year-over-year to 21, with Egypt and the UAE each recording nine transactions.
Source: Bloomberg