The UAE is sharpening its lead as the Gulf’s most mature and globally connected startup hub, with strong deal flow, rising exits and deeper international investor participation reinforcing its central role in regional venture capital, according to new data from MAGNiTT.
While Saudi Arabia delivered the fastest growth in funding volumes in 2025, the UAE continued to anchor the Middle East’s venture ecosystem through consistency, liquidity and breadth. UAE-based startups recorded 231 venture deals during the year, keeping the country among the region’s most active markets and underlining its ability to attract capital even as global investors became more selective.
Saudi Arabia emerged as the Middle East’s largest venture capital market by value in 2025, raising $1.72 billion, up 145 per cent year on year, with deal volume climbing 45 per cent to 257 transactions. That surge helped lift total Middle East venture funding to $3.43 billion, an 89 per cent increase from 2024, while deal count reached a record 581 transactions, up 13 per cent annually. MAGNiTT attributed the rebound to the return of late-stage liquidity, improved sentiment and stronger policy and diplomatic signals across the Gulf.
Yet the UAE’s importance lay less in headline growth and more in ecosystem depth. The country remained the leading market for exits, recording 17 mergers and acquisitions in 2025, the highest by headquarters in the region. Exits across the Middle East rose 19 per cent year on year to 32, a key indicator of market maturity at a time when global exits remained subdued.
Philip Bahoshy, founder and chief executive of MAGNiTT, said investor behaviour shifted materially during the year. Venture and private capital became more disciplined, with deployment decisions moving away from momentum-driven narratives towards fundamentals, scale and clear paths to liquidity. In a volatile macro environment shaped by geopolitical tensions, oil price swings and sharp corrections in public markets, investors increasingly favoured ecosystems with regulatory clarity, institutional depth and long-term economic ambition.
That dynamic worked in the UAE’s favour. With its established regulatory frameworks, deep financial markets and concentration of global funds, founders and advisers, the country continued to attract growth and late-stage capital even as early-stage activity slowed elsewhere. The UAE’s role as a regional base for international investors also strengthened, with North American, European and Asian funds expanding on-the-ground presence across venture and broader private capital.
Across the wider Middle East and North Africa, venture funding reached $3.8 billion across 688 deals in 2025, representing a 74 per cent increase in capital and a 6 per cent rise in transactions. This contrasted with the broader emerging venture markets universe, where total funding rose just 0.9 per cent to $9.63 billion, while deal activity fell 12 per cent to its lowest level in seven years. MAGNiTT said the Gulf’s relative outperformance reflected a reallocation of capital towards markets perceived as more resilient and policy-consistent.
Large rounds played a critical role in lifting regional totals. The Middle East saw a record $1 billion in mega deals during 2025, narrowing its funding gap with Southeast Asia and surpassing the sub-region in deal activity for the first time. Five late-stage rounds alone accounted for more than $1 billion, including high-profile raises by Ninja, HALA and Tabby, drawing international investors alongside regional backers.
Fintech remained the dominant sector across the Gulf, attracting $1.04 billion in funding, up 164 per cent year on year, across 152 deals. The UAE continued to play a central role in this trend, supported by strong digital adoption, regulatory support and its ambition to position itself as a global financial and payments hub. Beyond fintech, capital flowed into e-commerce and retail, sports and fitness, telecoms, communications and enterprise software, reflecting increasing sectoral diversification among UAE startups.
Artificial intelligence also moved firmly into focus. Funding into AI-related companies in the region jumped 204 per cent year on year to $817 million, as AI shifted from a long-term narrative to an active investment theme. The UAE’s national AI strategy, combined with growing enterprise adoption, helped position local startups to benefit from rising investor interest in infrastructure, enterprise applications and data-driven platforms.
Looking ahead to 2026, MAGNiTT struck a cautiously optimistic tone. While geopolitical risks and global debt pressures persist, the firm said the UAE’s venture ecosystem is stronger and more internationally integrated than at any previous point. Disciplined capital deployment, deeper global investor participation and continued growth in AI, fintech and enterprise software are expected to underpin the next phase of expansion.
