Local money kept MENA venture funding steady in 1H as dealmaking hit a multi-year low

MENA-based investors bankrolled 81% of the region’s venture funding in 1H 2026 — their biggest share in more than five years — as foreign money pulled back, according to a Magnitt report seen by EnterpriseAM. Startups raised USD 1.35 bn across 214 agreements, with funding down 22% y-o-y and dealcount down 41% — the fewest in a half since at least 2022. Active international investors dropped 48% y-o-y to 95 and the capital they deployed fell 65%, lifting the MENA-based share from 58% a year earlier.

1H numbers show a lag: Capital raised in 1H reflects agreements struck six to nine months ago, before the regional conflict started, Magnitt founder and CEO Philip Bahoshy tells EnterpriseAM. Early-stage agreements fell more than 50% y-o-y — what he calls “the truest measure of ecosystem appetite.” As we flagged in April, the war’s real hit surfaces in 3Q, once the pre-committed pipeline runs dry.

The quarterly split makes the point: Funding barely moved between quarters — USD 667 mn in 2Q vs USD 679 mn in 1Q — but agreements fell 27% q-o-q to 90, the lowest quarterly count in at least two years. Two agreements worth USD 480 mn combined (36% of all 1H capital) cushioned the decline; the 10 largest absorbed 58%.

UAE dominates, while Saudi’s drop can be chalked up to base effect: UAE startups drew USD 895 mn — two-thirds of MENA funding and up 53% y-o-y, even as dealcount fell 37%. About 60% came from three BlueFive Capital-backed agreements, including CargoX (USD 250 mn) and Mal (USD 230 mn). Saudi came second at USD 219 mn, down 74%, though “the comparison base is doing a lot of the work,” Bahoshy says, as funding peaked in the Kingdom in 1H 2025. Dealcounts were near-identical y-o-y: 79 in the UAE and 72 in Saudi Arabia.

Egypt and Morocco moved in opposite directions: Egypt slipped 29% to USD 142 mn but held third, while Morocco booked the region’s sharpest gain, up 305% to USD 32 mn. A June snapshot from Wamda points to a possible Cairo turn — the city vaulted to second for the month, with eight startups raising USD 41.4 mn on a steadier EGP and record tourism revenues.

Fintech kept the crown at USD 617 mn despite a 9% dip; transport and logistics jumped 661% to USD 273 mn (though CargoX alone was 92% of that).

A second read: Wamda’s 1H count, compiled with Digital Digest, lands on similar conclusions but reads the outlook more optimistically — an active pipeline and high-profile exits that could reignite 2H momentum. Wamda’s secondary story is a pullback in debt financing (down from 44% a year earlier); Magnitt’s is the foreign-capital retreat.

What’s next: Three signals will define 2H, Bahoshy says — return of international investors, recovery in early-stage dealflow after summer, and stabilization of exits. All three should surface in 3Q data.