The UAE attracted USD 206 mn in venture capital funding in 1Q 2025, trailing only Saudi Arabia, according to Magnitt's Venture Investment Summary report (pdf). This represented 30% of total MENA region funding and growth of 149% y-o-y, and was driven by a a jump in its Series A and B investments to USD 128 mn, up from USD 14 mn in the same period last year. KSA raised a total of USD 391 mn.

The Emirates was also the runner-up to KSA in terms of transaction numbers, despite the 47 recorded marking a 22% y-o-y decline as early stage investor activity waned. The region's other major markets — KSA and Egypt — also both saw a y-o-y decline in transactions for the period. Early-stage transactions in the UAE fell 34% y-o-y.

UAE-based venture capital firm PlusVC was the region's lead investor in terms of the number of investments, which were more than double those of runner-up Hub71.

REGIONAL PICTURE-

Venture capital funding in MENA rose 58% y-o-y to USD 678 mn despite transaction volumes dropping 21% y-o-y, according to Magnitt’s report. M&As saw a 163% y-o-y increase, and “signs of IPO recovery further underscored improving exit visibility,” the report said.

The culprits: Continued activity from wealth funds, startup ecosystem events, and interest rate cuts like those from the Central Bank of the UAE at the end of last year helped rally investor sentiment and liquidity, resulting in an uptick in both small and large investments, the report said.

Who’s doing the most in MENA? Fintech led funding in 1Q 2025, with investments surging 362% y-o-y to USD 384 mn, accounting for 57% of the region’s total, driven by Tabby’s USD 160 mn mega transaction. Enterprise software ranked second with a 112% y-o-y funding increase, while e-commerce and retail, education tech, and transport and logistics also made the top five list.

The quarter showed a clear shift towards investment in more established Series A and B startups with more robust financial models. Tickets under USD 1 mn dropped, while mid-range and large investments were on the up.

What’s next? Magnitt reckons new US tariffs and high global interest rates may increase uncertainty and impact future investment activity, while Wamda separately sees investors favoring safer, later-stage ventures amid risk aversion and a more difficult environment for early-stage startups.“In venture capital, this uncertainty is likely to impact three areas: the deployment of capital from LPs to VCs, VC’s willingness to make decisions in uncertain times, and finally, startups’ ability to raise funds,” said Magnitt CEO Philip Bahoshy in a press release (pdf).

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