Saudi Arabia earned its title as a global outlier among emerging venture markets (EVM) in 2025, securing the second-highest VC funding among EVMs during the year, according to Mangitt’s annual report. Saudi Arabia secured USD 1.72 bn across 257 transactions, marking a 145% y-o-y rise in value. That’s second only to Singapore, which secured USD 3.09 bn during the year.

Overall, EVMs saw a 12% y-o-y drop in transaction activity — the lowest in seven years — amid a 29% decline in Southeast Asia and a 15% fall in Africa.

The growth in Saudi Arabia was driven by strong local VC participation and rising international interest, with foreign VC involvement up 61% y-o-y, according to a separate press release (pdf). Non-MENA investors made up a record 34% of all backers in 2025, up from 20% in 2021, underwriting commercial risk and leading rounds. Meanwhile, the technology investment firm STV came in fourth globally among VC investors in EMVs by capital deployed, with USD 98 mn invested across 15 transactions.

The local market began shifting towards deeper maturity in 2025

Saudi Arabia’s VC market is pivoting more towards M&A amid an emergence of scale-ups, fueling exits and recycling talent and innovation, venture capitalist Ahmed Thukair previously told us. Meanwhile, IPOs are still not such a hot topic in Saudi Arabia due to stock market weakness, tighter valuation scrutiny, and a desire to avoid public market volatility.

Zooming out

The Middle East raised an all-time high of USD 3.4 bn in 2025 and was the only region among emerging venture markets to see an increase in transaction volume — which grew 13% to 581 transactions — surpassing Southeast Asia for the first time.

Saudi Arabia took the lead, securing USD 1.7 bn in investments, trailing only Singapore globally, which raised USD 3.1 bn. The region 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 MENA region raised USD 3.8 bn in VC funding.

This came down to both regional strength and weakness in Southeast Asia, where early-stage transactions fell 46% y-o-y to their lowest level in over a decade, Magnitt Research Department Manager Farah El Nahlawi told EnterpriseAM. Early-stage pipelines in the GCC stayed active due to domestic capital and government-backed programs, while late-stage liquidity returned through several very large rounds, El Nahlawi said. Events like Leap, FII, and Abu Dhabi Finance Week also helped attract investors and sustain momentum.

Where did the money go? The fintech sector took the regional lead in 2025, with funding reaching USD 1 bn. E-commerce came in second with USD 494 mn raised, followed by sports and fitness (USD 309 mn), telecommunications (USD 236 mn), and enterprise software (USD 184 mn). Meanwhile, MENA AI-related company funding jumped 204% y-o-y to USD 817 mn.

The region’s capital is becoming selective, with global VCs leading more rounds

MENA venture and broader private capital became more selective in 2025, with due diligence shifting from a focus on momentum to fundamentals, scale, and clear routes to liquidity, Magnitt CEO Philip Bahoshy said. On the M&A front, a recent rise in activity points to a more mature ecosystem and a desire to acquire tech capabilities rather than build them internally, TaylorWessing Partner Abdullah Mutwai said.

Global VCs began leading more rounds in the region, especially from series A onward, as risk is becoming clearer, El Nahlawi told us. Institutional investors gained confidence in enforcement, shareholder protections, and downside outcomes, particularly in the UAE and Saudi Arabia. Meanwhile, faster-scaling founders, stronger governance, and increasingly tangible exits reduced execution risk. That confidence was reinforced geopolitically by US President Donald Trump’s first visit to Saudi Arabia and the UAE, signaling long-term US commitment and stability.

What’s next

Looking ahead to 2026, Saudi Arabia is set to remain the Middle East’s most structurally supported VC market, with funding volumes rising alongside sustained transactional flow. Activity is expected to stay strong, underpinned by policy continuity, government-backed early-stage programs, and a well-established local investor base. On the funding front, the Kingdom is likely to continue attracting large Series A and growth rounds, with international investors already accounting for a record share of both participation and deployed capital.

Regionally, the Middle Eastern VC ecosystem is entering a more mature and competitive phase, where the focus shifts from capital availability to where it concentrates, how risk is priced, and whether liquidity pathways begin to open.

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