Mapping the ripple effects of the war on MENA venture capital -Magnitt

The MENA venture capital (VC) landscape is entering a period of adjustment as geopolitical volatility begins to reshape investor behavior. One month into the ongoing regional conflict and shifting macro conditions, a Magnitt report seen by EnterpriseAM indicates that while headline funding has yet to reflect recent volatility, underlying capital dynamics are starting to shift — with knock-on effects likely to surface in the months ahead.

This adjustment is driven by macro movements. Volatile oil prices (which briefly crested USD 100 per barrel) and inflation raise capital costs, while shifting interest rate expectations tighten global liquidity and heightened risk perception slows international deployment. Disruptions also stem from travel constraints that hinder in-person closings and fiscal shifts that increase sovereign selectivity.

The cascading effect

Reliance on international capital is the primary vulnerability. Foreign investors accounted for 49% of total MENA funding in 2025 and are historically the first to withdraw during shocks. This exposure is most acute in the UAE, where international participation reached 78%, compared to 29% in Saudi Arabia.

This is most pronounced during the growth stage, when international investors provided 69% of Series A and 51% of Series B+ funding in 2025, leaving larger rounds more exposed to changes in deployment pace.

Earlier stages also face risks as uncertainty causes investors to concentrate capital on existing portfolios. With only 7.3% of MENA startups historically advancing from early-stage to Series A, tightened conditions could weaken the long-term pipeline of high-growth companies within 6-18 months.

Exits could also see delays: Because nearly a quarter of MENA’s venture exits involve international buyers, the region may face a liquidity bottleneck as global risk appetite cools. As IPO windows are pushed back and M&A timelines lengthen, the resulting delay in capital recycling threatens to create a “self-reinforcing venture slowdown,” where weaker liquidity today dries up the capital available for the next generation of startups.

What about ol’ reliable? While government-backed sovereign investors continue to provide an important layer of stability, evolving fiscal conditions — which have caused downward revisions of many MENA states’ 2026 GDP forecasts — may lead to more selective strategies. Future allocations will likely prioritize sectors aligned with national mandates, such as AI and fintech infrastructure.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.2% yesterday on turnover of SAR 6.6 bn. The index is up 7.5% YTD.

In the green: MESC (+10.0%), Emaar EC (+10.0%), and Saptco (+9.9%).

In the red: Saudi Cable (-8.0%), Senaat (-6.7%), and Kingdom (-4.8%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.7% yesterday on turnover of SAR 28.9 mn. The index is down 3.2% YTD.

In the green: Almodawat (+18.3%), Alqemam (+11.9%), and NGDC (+9.3%).

In the red: Time (-30.0%), Albattal Factory (-20.5%), and Leaf (-10.7%).

CORPORATE ACTIONS-

Tabuk Agricultural Development Company’s board proposed a 77.4% capital cut to write off SAR 303.3 mn in accumulated losses, reducing capital to SAR 88.5 mn from SAR 391.8 mn, it said in a disclosure to Tadawul. The move will be executed by canceling 0.7741 shares per share held and remains subject to regulatory and shareholder approval. A previous proposal in December 2025 was rejected.