{"id":115711,"date":"2026-04-20T00:00:00","date_gmt":"2026-04-20T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/?p=115711"},"modified":"2026-04-20T03:10:16","modified_gmt":"2026-04-20T03:10:16","slug":"a-strong-1q-for-uae-startups-but-regional-war-threatens-momentum-come-2h","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2026\/04\/20\/a-strong-1q-for-uae-startups-but-regional-war-threatens-momentum-come-2h\/","title":{"rendered":"A strong 1Q for UAE startups, but regional war threatens momentum come 2H"},"content":{"rendered":"

Startups in the UAE were the most well-funded in 1Q 2026. <\/strong>That largely boils down to a single mega transaction, but is also a reflection of solid momentum carried over from 2025, Magnitt says in its latest report seen by EnterpriseAM. But the bigger news is that 1Q 2026 also saw significant seasonal softness on the back of compounded disruptions with Ramadan, Eid, and then, of course, the war.<\/p>\n

If you were waiting for 1Q data for insights into how the war has affected startup investments, it\u2019s too early for that. <\/strong>The real impact of recent geopolitical shocks won't be visible until later this year. \u201cThe [investment] that's being announced today is [one] that was already discussed earlier,\u201d Magnitt Research Director Farah El Nahlawi tells EnterpriseAM. \u201cThe expected [impact of the war] is going to start reflecting in the region in 3Q numbers,\u201d she added.<\/p>\n

VC investments typically take six to nine months to move from handshake to a close.<\/strong> This means 1Q numbers are largely a mirror of 2025 sentiment, Magnitt says.<\/p>\n

Case in point:<\/strong> We\u2019ve seen several startups announce funding rounds since the start of the war. Fikry Boutros, co-founder and co-CEO of Carnistore, which secured AED 45 mn in funding<\/a> from Emirates Growth Fund, told us<\/a> the investment had been in the works for months, and it was near closing when EGF said it would push ahead with closing the transaction despite the turbulent geopolitical environment and expected headwinds. <\/p>\n

But one potential repercussion of the war is that some startups likely opted not to disclose funding at all<\/strong>, possibly to avoid publicizing flat rounds or lower valuations, or simply because the geopolitical environment doesn\u2019t allow it, El Nahlawi said. <\/p>\n

A closer look at 1Q <\/p>\n

UAE startups raised USD 419 mn during the quarter<\/strong>, up 47% y-o-y, largely driven by Property Finder\u2019s bumper USD 170 mn round<\/a>. The volume of transactions, however, fell 45% y-o-y to just 37, reflecting a broader trend in the VC ecosystem of bigger funding rounds concentrated into a smaller number of investments. <\/p>\n

Pre-seed and seed activity in particular was softer<\/strong>, Magnitt said, and non-mega transactions saw a 13% y-o-y decline to USD 249 mn. <\/p>\n

The investor taxonomy <\/p>\n

One key shift in 1Q data is the composition of the investor base.<\/strong> International participation fell to 26% of capital deployed in Q1, down from 49% in 2025. This isn\u2019t a uniform retreat, however. El Nahlawi categorizes the foreign base into three distinct risk profiles:<\/p>\n