Saudi Arabia became the most active venture capital market in the MENA region by agreement volume for the first time, recording 173 transactions in the first nine months of 2025, up 38% y-o-y, according to Magnitt’s 3Q 2025 Emerging Venture Markets report seen by EnterpriseAM. The Kingdom raised USD 1.3 bn during the period, a 158% increase compared to the same period last year.

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Behind the surge: The rise in venture activity in the Kingdom was fueled by government-backed entities like SVC, Jada, and NTDP, Magnitt’s CEO Philip Bahoshy told EnterpriseAM. “Sovereign catalysts de-risked early stages and improved the regulatory environment needed for international investors,” Bahoshy said. This helped draw significant foreign interest, with non-Saudi investor participation rising to a record 55% in 9M 2025 — evidence of growing private and international momentum alongside public anchors, he said.

Early-stage is still king: Only three of the 173 total were mega rounds (over USD 100 mn), including Hala’s USD 157 mn and Tabby’s USD 160 mn. Meanwhile, early-stage investments continued to dominate, accounting for 87% of all agreements, with pre-seed and seed agreements jumping 53% y-o-y to 110 transactions. Fintech remained the Kingdom’s most active sector, recording 40 agreements, up 90% y-o-y, and accounting for 23% of the total volume, Bahoshy added.

A record year for the region: MENA startups raised over USD 3 bn across 469 transactions by September’s end. That’s more than double last year’s total and, for the first time, surpassing the longtime emerging market leader Southeast Asia, which trailed with USD 2.5 bn, according to Magnitt’s press release (pdf). The third quarter was MENA’s strongest on record, with USD 1.2 bn raised, up 121% y-o-y. This suggests a “potential shift in global capital allocation,” though a longer period is needed to confirm a permanent trend, Bahoshi told us.

The UAE commanded the top spot for total funding, rising 188% y-o-y to USD 1.43 bn across 164 transactions. The Kingdom and the UAE together accounted for more than 90% of total regional funding. Meanwhile, Turkey’s funding grew 50% to USD 428 mn, and Egypt saw a 37% decline to USD 202 mn across 53 agreements.

Growth across the board: Mega rounds — over USD 100 mn — drove more than half the total value in the third quarter, led by the UAE’s XPANCEO (USD 250 mn), Airalo (USD 220 mn), and Saudi Arabia’s Hala (USD 157 mn). Still, non-mega activity has been showing sustained quarterly growth since 3Q 2024, signaling “a deepening pipeline rather than short-term concentration,” Bahoshy told us. This was underscored by a maturing mid-stage, with Series A and B funding jumping 205% y-o-y to USD 1.4 bn in the first nine months of the year. The early-stage pipeline also remains robust, with pre-seed transactions rising 30% y-o-y, signaling a healthy influx of new founders.

The fintech sector remained in the lead, attracting USD 965 mn, up 97% y-o-y, and representing over a quarter of all transactions. Growth was supported by open banking frameworks, major regional events, and large Saudi tickets. Enterprise software also gained momentum, rising to USD 320 mn across 52 transactions, up from USD 70 mn across 44 rounds in the same period last year.

Rising exits and liquidity: Mergers and acquisitions activity doubled to 40 transactions in the first nine months of 2025 — a three-year high and a sign of a “healthier, more liquid ecosystem,” Bahoshy said. Exits were concentrated in the UAE (15) and Egypt (13) due to their mature buyer bases and ecosystems. However, “the exit challenge is more acute in the UAE and Egypt than it is in Saudi Arabia,” as the more mature startups in both countries are searching for liquidity to survive the global extension of the average seven-year path to an exit, according to Bahoshi.

Momentum is expected to keep going in 4Q: Magnitt expects the remaining months of 2025 to see “sustained momentum and measured optimism,” bolstered by continued public-private collaboration and institutional capital flowing into emerging markets.

Bucking the global trend: Emerging venture markets saw a 6% y-o-y decline in funding to USD 6.56 bn. Southeast Asia was hit hard with a 48% decline to USD 2.5 bn, logging its weakest quarter in seven years.

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