Egypt emerges as Africa’s leading VC hub in terms of transaction count and exists: The country secured USD 304 mn in VC funding in last year — marking an 11% y-o-y dip — across 69 transactions, the highest count among its African peers, according to Magnitt’s latest emerging venture markets report. We also led the continent in terms of VC M&A activity, with 12 transactions.

In context: In terms of funding, we came in second behind South Africa (USD 376 mn). We ranked third regionally behind Saudi Arabia (USD 1.7 bn) and the UAE (USD 1.6 bn).

Funding declined mainly because there were no mega rounds (USD 100 mn+), which inflated 2024’s figures, Magnitt’s Research Department Manager Farah El Nahlawi told EnterpriseAM. Egypt’s funding actually increased 65% y-o-y when excluding these outliners.

Capital allocation is what really changed this year, with pre-seed and seed activity slowing, and series A nearly tripling in value, concentrating into just five transactions, El Nahlawi said. “So this is not investors’ low-balling founders; they are rather being cautious, concentrating capital into fewer, more mature companies. Investors are being selective, but they are writing larger checks where conviction is higher.”

The local ecosystem is displaying resilience despite the slowdown, with series A funding rising in value, showing that investors are moving up the maturity curve, El Nahlawi told us. Funds like F6 Ventures are backing this trend with a high-volume, small-check strategy, supporting more early-stage teams while keeping the option to double down on series A winners. This approach spreads risk and aligns with the region’s current exit and liquidity environment, due to the presence of fewer mega transactions and longer holding periods.

What’s next

The local VC ecosystem remains highly sensitive to macro conditions, but its depth of talent and market size allow it to respond quickly when stability improves, El Nahlawi said. “If the macroeconomic backdrop and global risk sentiment improve in 2026, we expect deal flow in Egypt to increase, as Egyptian startups remain attractive at entry valuations relative to prior years, particularly at the early-stage.”

Funding, however, is likely to stay concentrated in Series A and selective scale rounds, “reflecting investor caution regarding macroeconomic risk, currency exposure, and exit timelines,” El Nahlawi said. “Capital will not disappear, but it will be more disciplined, with fewer large headline rounds, unless global liquidity conditions improve,” she continued.

Regionally, the Middle Eastern VC ecosystem is entering a more mature and competitive phase, with the focus shifting from capital availability to where it is concentrated, how risk is priced, and whether liquidity pathways begin to open, El Nahlawi mentioned to us.

Zooming out

The Middle East raised a record USD 3.4 bn last year, emerging as the only emerging venture market to post an increase in transaction count, which grew 13% y-o-y to 581 transactions. The region also saw a record USD 1 bn in mega transactions, supported by the return of late-stage liquidity, stronger diplomatic ties, and rising investor confidence. Overall, the region raised USD 3.8 bn in VC funding, with the fintech sector alone raising USD 1 bn.

Setting the scene for 2026: “The market is moving toward a more disciplined, risk-managed M&A environment favoring companies with strong fundamentals and clean governance,” Taylor Wessing Partner Abdullah Mutawi.

(** Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Tags: