Egypt’s startups ranked third in the MENA region for AI-linked startup funding in 1H 2025, raising USD 69 mn across seven transactions, with Nawy’s USD 52 mn series A funding round accounting for 75% of the total, according to Magnitt’s MENA Artificial Intelligence Venture Capital report. AI-focused startups raised USD 14 mn out of the total, while AI-enabled ventures — which integrate AI into their operations — secured USD 55 mn.

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AI startups across the region secured USD 302 mn in funding during the period, marking a 152% y-o-y increase. AI funding accounted for 17% of total MENA venture capital, with AI-native startups capturing 58% of total AI funding and AI-enabled ventures accounting for 42%.

The UAE was the region’s biggest market for AI funding in 1H 2025, with USD 125 mn raised across 35 transactions, a 64% y-o-y increase. In close second was Saudi Arabia with USD 96 mn in AI funding raised across 29 transactions, more than 4x the investments raised in 1H 2024. The two countries with Egypt rounding up the top three collectively accounted for 96% of MENA’s total AI funding and 85% of its transaction activity.

Pre-seed funding accounted for a record 27 rounds, with the UAE (11 rounds) and Saudi (12 rounds) capturing most of the early-stage activity. This early-stage trend, alongside expanding series A activity, signals a “healthier investment funnel” that seeds new ventures while scaling proven AI players, Magnitt said.

The most popular industries within AI? Fintech saw investments jump sixfold to USD 77 mn, according to a separate press release (pdf). Enterprise software followed, securing 30 of the 84 investments during the period and raising USD 58 mn — up 164% y-o-y and accounting for 36% of all AI transactions. The two sectors dominated due to robust data availability, clear use cases, and strong enterprise demand. Real estate ranked third with USD 56 mn, followed by edtech at USD 32 mn and construction and infrastructure at USD 29 mn.

Emerging AI sectors are expected to thrive: Real estate, edtech, law, construction, healthtech, and govtech are all promising industries, despite being capital-intensive with long development cycles, Magnitt’s Research Manager Farah El Nahlawi told EnterpriseAM. She pointed to government support, solid data infrastructure, and integration with corporate systems as potential investment drivers in the future. “Policy tailwinds and ecosystem build-out with government-led programs such as Saudi Arabia’s Humain and the UAE’s Stargate AI Campus set the tone for investor confidence by demonstrating long-term national commitment to AI,” she said.

The main investors? Private VC dominated AI funding, with corporate participation and indirect sovereign capital playing supporting roles, El Nahlawi told us. Seven of the top 10 investors by capital deployed are MENA venture or growth funds. Meanwhile, sovereign wealth funds, including Mubadala, PIF, and ADQ, channeled capital indirectly through venture arms and funds-of-funds. Private and domestic institutional capital remain the main drivers of AI investment across the region.

More to come: AI is set to become a defining pillar of MENA’s VC landscape over the next three to five years, El Nahlawi told us. Funding is expected to be concentrated in fewer, larger rounds as mid-stage startups grow into regional scale-ups, with series A and B rounds rising as local investors gain confidence and international funds seek co-investments, she added. Further integration of AI into finance, energy, healthcare, and logistics will also boost its share of total VC activity, while corporate investors and government-linked programs will continue to bridge early-stage funding gaps, El Nahlawi noted.

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