Startup Funding in MENA Slows in February Despite Continued Investor Activity

Startup investment across the Middle East and North Africa slowed in February, with companies raising a combined $326.6 million through 62 deals, reflecting a drop in funding after a stronger start to the year.

The total represents a 42 percent decline compared with January and a 38 percent decrease from February 2025, according to market data tracking regional venture capital activity. The fall was largely linked to the absence of large late-stage deals rather than a broad pullback in investor participation.

Despite the lower funding volume, the overall structure of investment remained largely unchanged. Debt financing accounted for about 16 percent of the capital deployed, suggesting that investors continue to favor equity-backed ventures while still maintaining access to alternative funding mechanisms.

The United Arab Emirates remained the region’s most active startup hub during the month. Twenty-three startups in the country raised $162.8 million, accounting for nearly half of all capital invested across the MENA region. Saudi Arabia ranked second with 25 startups securing $87.7 million, while Egypt placed third after six deals raised $64 million, largely driven by a single later-stage transaction.

Financial technology continued to dominate the investment landscape. Fintech startups attracted $94.7 million across 14 deals as investors maintained strong interest in digital payments, lending platforms and financial services tied to the region’s growing digital economy.

E-commerce followed as the second most funded sector, raising $52 million across three deals. Much of that investment came from a $50 million pre-series C funding round secured by Egyptian grocery delivery company Breadfast. Deep technology startups ranked third, raising $51 million through two deals.

Early-stage companies accounted for most of the deal activity. A total of 49 startups raised $136.4 million, showing that investors remain active in funding companies during their initial growth phases even as larger investments remain more selective.

Business-to-business ventures secured the largest share of funding, raising $137 million across 38 deals. Consumer-focused startups attracted $62 million through 18 transactions, while the remaining funding went to companies operating hybrid business models.

Gender disparities in venture funding remained evident. Startups founded exclusively by women did not secure funding during February, while mixed-gender founding teams raised a combined $14 million across three deals.

Several individual transactions highlighted continued investment momentum in specific sectors. Healthcare platform TruDoc Healthcare raised $15 million in a pre-series B round to expand its virtual and at-home care services across Gulf Cooperation Council markets. In Saudi Arabia, consumer microfinance company Muhlah closed a $7.5 million seed round to scale its Shariah-compliant financing services.

Meanwhile, US-based advertising technology firm Converted acquired Egyptian fashion e-commerce platform Mitcha as part of its expansion into regional digital commerce.

Toward the end of February, geopolitical tensions increased after US-Israeli attacks on Iran. Analysts say the developments are unlikely to have affected deals completed during the month, though they could influence startup funding activity in the coming weeks as investors reassess regional risks.

With early-stage investment remaining active but large deals limited, the regional startup ecosystem continues to grow while adapting to global economic and geopolitical uncertainty.