Saudi Arabia Leads MENA VC investments Surge in Q1-25

Defying dip in global funding, tightening deal flows and driven by interest rate cuts that boosted investor confidence, venture capital investments in the Middle East and North Africa (MENA) region jumped during the first quarter of 2025, Dubai headquartered data analytics platform MAGNiTT said.

In its Q1 2025 MENA Venture Investment Report, MAGNiTT said that start-ups in the region raised $678 million, their strongest quarterly performance since the end of 2023. The average deal sizes also rose, reflecting increased capital flowing into larger start-ups.

Saudi Arabia not only topped the list of investment destinations in the region, but was also ranked first globally among emerging markets, attracting $391 million. The Kingdom was followed the UAE, which accounted for $195.5 million, half of the amount realised by Saudi Arabia.

Interestingly, the UAE has led the dominated the MENA venture landscape, accounting for 45% of total funding and 26% of all deals in 2021.

The Middle East has defied the broader slowdown in emerging markets fundraising, thanks in part to active sovereign wealth funds (SWFs) and events in Riyadh such as LEAP 2025 and Dubai that have stimulated activity, according to the report.

However, the report said that this momentum has come under threat as the US government’s tariff policies created global uncertainty, and falling oil prices could impact investment decisions by SWFs such as Saudi Arabia’s Public Investment Fund (PIF).

MAGNiTT CEO and founder Philip Bahoshy said that in the venture capital space, this uncertainty is likely to impact three areas: the transfer of funds from investors (pension funds or SWFs) to venture capital firms, the willingness of these firms to make investment decisions under uncertainty, and the ability of start-ups to raise funding.

Despite these challenges, he said that the strength of local capital and government policies supporting start-ups continued to pave the way for long-term growth, and technology-driven sectors appear poised to attract new capital.

Fintech funding accounted for 57% of total venture capital raised in the region during the first quarter, led by a $160 million funding round for Saudi Arabia-based Tabby. Even the enterprise software and edtech saw strong growth, while e-commerce and retail slowed.

The most active investment companies in the region included Blue Pool Capital and Wellington Management, in addition to STV and Hassana Investment Saudi Arabia.

M&A Deals

The Middle East and Africa region recorded a record number of mergers and acquisitions (M&A) deals during the first quarter. The total number of deals rose to 21, more than double the number recorded during the corresponding period last year. Egypt and the UAE topped the list, with nine deals each, the report said.