Startup Funding in the Middle East and North Africa: A Surge in 2025
Startup funding in the Middle East and North Africa (MENA) has seen a remarkable resurgence, reaching $2.1 billion during the first half of 2025. This figure represents a staggering 134% increase compared to the same period in 2024, with 334 deals recorded across the region. This growth can be attributed, in part, to a rise in debt-based financing, yet it also highlights a robust level of investor activity amid ongoing regional uncertainties.
Q2 Performance: A Mixed Bag
The second quarter of 2025 wrapped up on a high note, with $583.4 million deployed across 149 deals. This performance not only exceeded the figures from Q2 2024 in both value and deal count but also showcased a rebound despite a slowdown in June. Investors demonstrated a continued appetite for exposure to the region’s startup ecosystem, even as market conditions remained challenging.
Challenges Amid Growth
Throughout the first half of the year, various factors contributed to a climate of uncertainty. Currency volatility, ongoing regional tensions, and fluctuations in global commodities—including gold, oil, and the US dollar—created a complex backdrop for investment. Nevertheless, select venture capital firms remained active, deploying capital with a measured sense of optimism.
Sector Highlights: Fintech Takes the Lead
In Q2, fintech emerged as the dominant sector, attracting the highest volume of capital. A total of 38 fintech startups secured a combined $170 million. Following closely was the proptech sector, which raised $77 million across eight transactions, while traveltech recorded $40 million through two deals.
Saudi Arabia reclaimed its position as the most funded market in the quarter, with $231.5 million invested in 38 startups, surpassing the United Arab Emirates (UAE), which attracted $197.7 million across 52 transactions. Egypt ranked third, securing $133 million through 30 deals.
Mid-Stage Startups Capture Capital
When examining funding by stage, mid-stage startups captured the largest share of capital, with $161 million allocated across 10 Series A deals. Early-stage startups dominated in terms of transaction volume, with 67 deals recorded in the quarter. Interestingly, only four debt transactions occurred during this period, alongside two later-stage equity rounds.
Debt Financing: A Key Driver
The total investment for H1 2025 reached $2.1 billion, a significant leap from $898 million in H1 2024. However, when excluding debt-based transactions—which accounted for $930 million—the year-on-year growth narrows to 53%. This trend coincided with renewed global attention on the region, particularly following a visit from US President Donald Trump, which was interpreted as a signal of strategic interest in MENA’s tech infrastructure.
Saudi Arabia’s Dominance
Saudi Arabia accounted for approximately 64% of total capital deployed in MENA during the first half of the year, with investment volumes surging 342% compared to H1 2024. The majority of funding activity in the Kingdom was concentrated in fintech, which raised $969 million across 20 transactions. The ecosystem benefited from strong government intervention and backing from sovereign wealth funds.
Despite the dominance of male-led ventures, three female-founded startups raised a total of $60 million, while mixed-gender founding teams secured $34 million across seven deals. Domestic firms like STV, Wa’ed Ventures, and Raed Ventures drove much of the funding activity, with international participation also emerging, notably from JPMorgan.
UAE’s Steady Growth
While the UAE is no longer the top-funded market, it continued to attract significant investor interest. In H1 2025, 114 UAE-based startups secured $541 million in capital, marking an 18% increase from the previous year. Debt represented just 19% of total UAE deal volume, indicating a healthier equity pipeline.
Fintech led the sectoral breakdown in the UAE, raising $265.8 million across 35 deals. Insurtech followed with $55 million, while Web3 and AI startups each secured $44.7 million. Female-led startups in the UAE raised $17.6 million, while mixed-gender teams secured $91.7 million, although male-founded startups continued to dominate the capital landscape.
Egypt’s Momentum Amid Economic Strain
Egypt experienced a 106% year-on-year increase in funding volume, raising $179 million across 52 deals. This growth occurred despite ongoing macroeconomic challenges, with Egypt’s external debt reaching 38.8% of GDP by the end of 2024. Debt financing accounted for 13% of the funding activity.
In contrast to Saudi Arabia and the UAE, Egypt’s most funded sector was proptech, which received $75 million through three transactions. Fintech followed closely, raising $85.3 million, while e-commerce startups secured $24.8 million.
The Gender Funding Gap
Despite some progress, the funding allocation remained highly imbalanced across genders. Male-founded startups received nearly 89% of total H1 capital, while female-founded startups accounted for just 27 transactions, raising a combined $84.5 million. Mixed-gender founding teams secured $150 million, highlighting the ongoing gender funding gap in the region.
The Landscape Ahead
As the MENA startup ecosystem continues to evolve, the interplay of fintech, debt financing, and mid-stage rounds will shape the landscape. Early-stage activity remains strong, particularly in B2B models, which attracted the majority of investor capital. The region’s potential is evident, but addressing the gender funding gap will be crucial for fostering a more inclusive entrepreneurial environment.