Start-up investment across the Mena region slowed in February 2026 after a stronger start to the year, but the UAE further strengthened its position as the region’s dominant venture capital hub, attracting nearly half of all funding deployed during the month.
Start-ups across Mena raised $326.6 million through 62 deals in February, representing a 42 per cent decline from January and a 38 per cent drop compared with the same period last year. Analysts say the decline largely reflects the absence of mega deals rather than a retreat by investors, with early-stage funding continuing to drive deal activity.
Despite the monthly slowdown, the UAE stood out as the clear centre of venture capital in the region. A total of 23 UAE-based start-ups secured $162.8 million in funding in February, accounting for almost half of all capital invested across Mena.
Saudi Arabia ranked second, with 25 start-ups raising $87.7 million, while Egypt placed third with $64 million raised from six deals, largely driven by a single late-stage investment.
Industry data shows that the UAE and Saudi Arabia have increasingly dominated the regional venture capital landscape. According to venture intelligence platform MAGNiTT, the two markets together attracted around $3.13 billion in investments in 2025, accounting for the overwhelming majority of capital deployed across Mena.
The UAE’s strong position reflects years of policy initiatives aimed at building a globally competitive technology and innovation ecosystem. Programmes such as Abu Dhabi’s Hub71, Dubai’s innovation clusters and a growing network of venture funds and accelerators have created a favourable environment for start-ups and investors.
Abu Dhabi’s technology ecosystem has grown rapidly in recent years, with Hub71 start-ups alone securing $2.17 billion in funding as of 2024, highlighting the scale of capital flowing into the country’s innovation economy.
Experts say the UAE’s integrated investment environment, pro-business regulations and global connectivity have made it a natural gateway for entrepreneurs seeking to scale across the Middle East, Africa, and South Asia.
“The UAE continues to attract international founders and investors because of its supportive regulatory framework and strong access to capital,” said a start-up consultancy. It noted that Abu Dhabi’s ecosystem has climbed rapidly in global rankings as innovation initiatives gain momentum.
The UAE’s ecosystem has expanded quickly in recent years, with more than 5,600 start-ups registered across the country by mid-2024, reflecting its position as the leading incubator for entrepreneurial ventures in the Gulf.
Sector trends in February continued to reflect the region’s digital transformation priorities. Fintech remained the most attractive sector for investors, drawing $94.7 million across 14 deals. The sector’s resilience reflects strong demand for digital payments, lending platforms and financial infrastructure as economies across the region accelerate digitalisation.
Artificial intelligence and advanced technologies are also drawing increasing investor interest. MAGNiTT data shows that AI-related ventures are capturing a rising share of venture capital, with the UAE receiving more than 60 per cent of AI start-up funding across Mena in 2025 as investors focus on scalable technologies.
E-commerce also re-emerged as a major funding destination in February, attracting $52 million across three deals, largely driven by Breadfast’s $50 million pre-Series C funding round.
Deeptech ranked third, securing $51 million across only two transactions, underscoring the capital-intensive nature of these ventures while highlighting sustained investor interest in advanced technologies.
February’s funding activity was dominated by early-stage start-ups rather than large growth rounds. A total of 49 companies raised $136.4 million, suggesting investors remain keen to back innovation but are deploying capital more selectively amid global economic uncertainty.
Business-focused start-ups continued to attract the largest share of funding. B2B companies accounted for 38 of the 62 deals completed during the month, raising $137 million in total investment. In comparison, B2C start-ups secured $62 million across 18 deals, while the remainder went to firms operating hybrid models.
Despite strong momentum in venture activity, the funding gap for female entrepreneurs remained a concern. Start-ups founded solely by women did not secure any funding in February, while only three mixed-gender founding teams raised capital, collectively attracting $14 million.
Analysts say addressing gender disparities in venture funding will be essential to unlocking the full potential of the region’s start-up ecosystem.
According to industry experts, venture capital activity across Mena is expected to remain resilient despite periodic volatility. Several regional venture funds closed new investment vehicles toward the end of 2025, leaving substantial capital available for deployment in the coming quarters.
While geopolitical tensions and global economic uncertainty may occasionally slow investment cycles, the UAE’s dominant role as the region’s start-up funding hub appears firmly entrenched.
