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Saudi led the Middle East and North Africa (MENA) region in venture capital funding in 1Q 2025, attracting USD 391 mn — over half of the region’s total — and topping global emerging markets, Bloomberg reports, citing Magnitt data.
The drivers: The Kingdom secured the largest share in both capital raised and agreement count thanks to a surge in Series A and B rounds, strong state-backed investment, and a maturing startup ecosystem positioning it as the “beating heart” of MENA’s venture ecosystem, Magnitt’s 1Q 2025 MENA Venture Investment Report reads.
MENA bucks the trend: VC investment in MENA climbed 58% y-o-y in 1Q to USD 678 mn — its strongest quarterly figure since late 2023 — driven by interest rate cuts, active sovereign wealth funds, and startup-focused events in Riyadh and Dubai. The strong growth comes amid a broader slowdown across emerging markets.
Smaller tickets made up the bulk: Small rounds (below USD 100 mn) accounted for USD 518 mn of the region’s total funding in 1Q, rising from USD 298 mn in the same period last year. Meanwhile, mega transactions (above USD 100 mn) rose to USD 160 mn.
The standout sectors: Fintech led the pack, capturing 57% of all funding — driven by homegrown Tabby’s USD 160 mn series E round. Enterprise software and edtech also saw strong growth, while e-commerce and retail experienced a slowdown.
AI investment also begun to pick up some rhythm in the region, accounting for 5% of total investment but still well below the 37% global average, said Magnitt CEO Philip Bahoshy.
Meet the investors: STV, Hassana Investment, Blue Pool Capital, and Wellington Management were the region’s most active VC players, closing some of the largest transactions. STV participated in Buildnow’s USD 9.7 mn investment round, Calo’s USD 25 mn series B round, and Tabby’s USD 160 mn series E round. Still, foreign support remained a key factor, as it accounted for roughly 40% of total investment, Bahoshy said.
ON THE M&A FRONT- The M&A sector hit a quarterly peak with an all-time high of 21 regional agreements, led by Egypt and the UAE with nine agreements each.
Looking ahead: While MENA’s momentum remains strong, Bahoshy warned that declining oil prices and market uncertainty are “affecting the whole funnel,” dampening investor confidence and potentially impacting LP capital deployment, VC decision-making, startup fundraising, and IPOs. However, long-term prospects remain robust, supported by government backing and tech sector growth.
ICYMI- A recap of last year: Despite a 44% y-o-y drop, Saudi led MENA with USD 750 mn in VC funding in 2024 (almost half the regional total) and saw the largest increase in transaction numbers (up 16% y-o-y at 178), according to Magnitt’s 2024 venture investment report. PIF-backed Sanabil was the top investor with USD 59 mn, and Saudi e-commerce firm Salla secured the largest transaction at USD 130 mn.
