UAE startups led the region in volume of funding rounds with a total of 188 funding rounds in 2024, according to Magnitt’s venture investment summary report (pdf). This accounted for 40% of all funding rounds in the Mena region, and marked a 9% y-o-y increase.

Despite the uptick in the number of funding rounds, funding fell 8% y-o-y to USD 613 mn during the year, in line with a wider regional trend which saw funding fall 29% y-o-y to USD 1.5 bn. The value of funding rounds in the UAE came second to Saudi Arabia, which was the top country in terms of funding, with USD 750 mn in investments.

On the upside, the volume of funding increased in the region by 10% y-o-y, with some 461 transactions recorded, outperforming other emerging markets like Africa. The number of investors in Mena also rose 14% to 392.

Megadeals are giving way to smaller transactions: The decline was mainly driven by a general dip in megadeal funding across emerging markets, which came for the third year in a row. Funding rounds valued at more than USD 100 mn accounted for less than 20% of total funding in the region last year, down from 30% in 2021, Bloomberg quotes Magnitt CEO Philip Bahoshy as saying.

Late-stage investments were also down among emerging markets and were the biggest driver of the decline in funding across emerging markets, the venture data analytics platform said.

Instead, investment rounds in the USD 1-5 mn range are on the rise, with investors growing more cautious amid high costs of capital and volatile market conditions, Bahoshy told Bloomberg. Early-stage investments saw a 5 percentage point uptick during the year, according to the report.

Exits in the region were also down (20% y-o-y) amid a global liquidity crunch, though the UAE accounted for half of them, securing 12 out of the 24 exits that took place.

The most popular sectors in 2024 for venture investors: E-commerce and retail were the most popular sectors for Mena investors last year, securing USD 396 mn in investments and capturing 54 of the total investments during the year. Fintech comes second in terms of funding at USD 387 mn, but comes first in terms of volume of investments, with 93 investments.

LOOKING AHEAD-

The region is becoming a key hub for venture capital, attracting global players like General Atlantic — which set up shop in Riyadh and Abu Dhabi — and Golden Gate Ventures due to its opportunities and rapid ecosystem growth, Yana El Dirani, head of Mena at Endeavor Catalyst, said. This momentum is driven by “strong demographic trends, digital transformation, and government-backed initiatives” that foster innovation, she added.

The UAE and Saudi Arabia are both expected to attract more VC investments, Endeavor Catalyst Managing Partner Allen Taylor also said, adding that 2025 may also see a return of international VC capital to frontier markets like Egypt, Turkey, and Pakistan, which have seen limited investment in recent years.

New unicorns and IPOs in 2025? Taylor expects at least five new unicorns emerging out of the Mena region in 2025. More liquidity from IPOs and M&As is also expected, with startups like Tabby, Tamara, TruKKer, Floward, and Unifonic all expected to go public.

PLUS- More Corporate Venture Capital (CVC) activity ahead. “We’re expecting Corporate Venture Capital (CVC) firms to play an increasingly vital role in the Mena region, particularly in Saudi Arabia, given the continuous growth we’re seeing in the overall startup ecosystem,” Anas Algahtani, CEO of Aramco’s venture arm Wa’ed Ventures, said.

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