Key Takeaways
- • Mena startups raised $3 billion in the first nine months of 2026, down 7 percent from the same period of 2025, according to Magnitt data released on Monday.
- • Transactions above $100 million captured more than half of all capital, already exceeding 2025's full-year total, while funding outside mega-rounds fell 32 percent year on year.
- • Overseas investors supplied 42 percent of funding from January to September, their lowest share in three years, down from 50 percent in 2025.
- • Active VC investors fell 16 percent to 356, while regional investors accounted for 55 percent of them, the highest share in five years, and provided 58 percent of capital.
- • Investors are prioritising companies with real revenue, a clear path to scale, and demonstrable AI use that improves operations, speed, efficiency or cost.
Summary
Venture funding in the Middle East and North Africa (Mena) is becoming harder to secure as the US-Israeli war against Iran and the rise of artificial intelligence reshape investor behaviour, industry executives told Arabian Gulf Business Insight (AGBI). Western investors are reassessing their exposure during the conflict, which has drawn Gulf states, Jordan and Iraq into direct hostilities and disrupted energy, aviation, logistics and hospitality across the region.
According to industry platform Magnitt, Mena startups raised $3 billion in the first nine months of the year, 7 percent less than in the same period of 2025. Magnitt said the headline figure "reflects capital concentrating in a small number of deals rather than a broad-based recovery." Transactions above $100 million attracted more than half of all capital, while funding outside these mega-rounds fell 32 percent year on year.
Overseas investors supplied 42 percent of funding from January to September, down from 50 percent in 2025 and their lowest share in three years. Regional venture firms are filling the gap. The number of active VC investors fell 16 percent to 356, but regional investors made up 55 percent of them, their highest share in five years, and supplied 58 percent of capital. Soumaya Ben Beya Dridje, a partner at Qatar-based Rasmal Ventures, said the retreat of international investors remains significant, adding, "The region did not stop being funded; it started being funded from inside."
Executives characterised the downturn as a moderate correction rather than a collapse. Omar Sati, managing director of Dash Ventures, an Amman-based VC company, described the trend as "a pull-back not a cliff," citing a "flight to familiarity" in which investors double down on existing relationships. Bilal Baloch, a partner at Shorooq, a UAE investment company, said Western capital is "co-investing alongside established regional funds rather than leading early-stage rounds directly." Recent deals included participation by Boston-based Wellington Management in a $233 million round for Tabby, a UAE and Saudi fintech; co-leadership by Palo Alto's 500 Global of a raise for Saudi building-materials procurement platform BRKZ; and a $13 million round led by Paris-based Partech for Synapse Analytics, an Emirati credit and risk management software company.
AI is increasingly a condition for funding. Abdel-Azim Osman, co-founder of Egyptian real estate technology platform Nawy, said capital is concentrating on companies with real revenue, a clear path to scale, and a focus on AI and its infrastructure. Sati's firm assesses AI deployments against three criteria: hard-to-replicate proprietary data or workflows, a step-change in unit economics, and customers willing to pay. Sati noted AI need not sit in the product itself, saying it "can be in operations, for speed, efficiency and cost," but that "a founder without a good answer to that question today is at a disadvantage." Baloch said high-quality non-AI founders with strong propositions could still raise capital. Magnitt data shows fintech, transport and logistics, and manufacturing attracted the most VC funding in Mena during the period.
According to industry platform Magnitt, Mena startups raised $3 billion in the first nine months of the year, 7 percent less than in the same period of 2025. Magnitt said the headline figure "reflects capital concentrating in a small number of deals rather than a broad-based recovery." Transactions above $100 million attracted more than half of all capital, while funding outside these mega-rounds fell 32 percent year on year.
Overseas investors supplied 42 percent of funding from January to September, down from 50 percent in 2025 and their lowest share in three years. Regional venture firms are filling the gap. The number of active VC investors fell 16 percent to 356, but regional investors made up 55 percent of them, their highest share in five years, and supplied 58 percent of capital. Soumaya Ben Beya Dridje, a partner at Qatar-based Rasmal Ventures, said the retreat of international investors remains significant, adding, "The region did not stop being funded; it started being funded from inside."
Executives characterised the downturn as a moderate correction rather than a collapse. Omar Sati, managing director of Dash Ventures, an Amman-based VC company, described the trend as "a pull-back not a cliff," citing a "flight to familiarity" in which investors double down on existing relationships. Bilal Baloch, a partner at Shorooq, a UAE investment company, said Western capital is "co-investing alongside established regional funds rather than leading early-stage rounds directly." Recent deals included participation by Boston-based Wellington Management in a $233 million round for Tabby, a UAE and Saudi fintech; co-leadership by Palo Alto's 500 Global of a raise for Saudi building-materials procurement platform BRKZ; and a $13 million round led by Paris-based Partech for Synapse Analytics, an Emirati credit and risk management software company.
AI is increasingly a condition for funding. Abdel-Azim Osman, co-founder of Egyptian real estate technology platform Nawy, said capital is concentrating on companies with real revenue, a clear path to scale, and a focus on AI and its infrastructure. Sati's firm assesses AI deployments against three criteria: hard-to-replicate proprietary data or workflows, a step-change in unit economics, and customers willing to pay. Sati noted AI need not sit in the product itself, saying it "can be in operations, for speed, efficiency and cost," but that "a founder without a good answer to that question today is at a disadvantage." Baloch said high-quality non-AI founders with strong propositions could still raise capital. Magnitt data shows fintech, transport and logistics, and manufacturing attracted the most VC funding in Mena during the period.
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