The Middle East and North Africa (MENA) region just posted one of its strongest startup funding halves ever, and the story behind the numbers is as complex as it is promising. With total startup investment reaching $2.1 billion in the first half of 2025, it’s clear that the region is shifting gears.
But behind that record figure lies a bigger trend: debt financing is reshaping investor behavior, while Saudi Arabia is stepping firmly into the lead.
Here’s a breakdown of what’s driving this funding surge and what it means for founders, investors, and tech leaders in the region.
A 134% Year-on-Year Surge in Funding
Startup funding in H1 2025 more than doubled compared to H1 2024, thanks to growing investor activity despite macro uncertainty.
- Total raised: $2.1 billion—up from $898 million in H1 2024.
- Deal count: 334 deals across MENA—indicating broad-based momentum.
- Q2 alone: $583.4 million across 149 deals, showing resilience even during a market cool-off in June.
Market Conditions Remain Tough, But Investors Are Adapting
Founders are still operating in a volatile environment, marked by:
- Currency fluctuations and commodity swings, especially in oil, gold, and the US dollar.
- Ongoing geopolitical tensions across parts of the region.
- Uncertain macroeconomic conditions are making risk assessments more conservative.
Still, investors are staying active, often shifting strategy rather than pulling back.
The Rise of Debt Financing
Debt financing is playing a much larger role than before and reshaping deal structure across MENA.
- $930 million came from debt-based instruments, nearly 44% of total H1 funding.
- Excluding debt, the YoY growth narrows to 53%, still impressive, but more tempered.
- Only 4 debt deals were recorded, meaning each was large and strategic.
- JPMorgan’s involvement in a Saudi fintech debt round (Lendo) points to growing institutional appetite.
Debt is becoming a useful tool for later-stage or revenue-generating startups seeking capital without equity dilution, especially in capital-intensive sectors like fintech and proptech.
Saudi Arabia: MENA’s New Investment Powerhouse
The Kingdom overtook the UAE as the region’s top investment destination in H1 2025.
- $231.5 raised across 38 Saudi startups, a 342% increase YoY.
- 64% of all MENA capital went to Saudi-based companies.
- Fintech dominated, raising $969M across 20 deals.
- Contech ($48M) and proptech ($39M) followed in sector activity.
- Sovereign wealth funds and public-private initiatives drove capital flows.
- Saudi Arabia is also attracting global players, aided by a pro-startup policy push.
The government’s sustained backing, from regulatory reform to capital incentives, is making the Kingdom an increasingly attractive hub for regional and international founders.
UAE Holds Steady, Shows Strength in Equity Markets
The UAE remains a reliable bet for investors, even amid regional competition.
- 114 startups raised $541M, up 18% YoY.
- Only 19% of this came from debt, showing a more equity-driven market.
- Fintech led with $265.8 million across 35 deals, followed by:
- Insurtech: $55M (5 deals)
- Web3: $44.7M (11 startups)
- AI: $44.7M (13 startups)
UAE startups are pulling in funds across emerging tech sectors, with less dependence on debt, a sign of healthy early-stage equity appetite.
Egypt Posts Strong Growth Despite Headwinds
Despite high external debt and economic pressure, Egypt saw a notable bump.
- $179M raised across 52 deals, a 106% YoY increase.
- 13% of this was debt, suggesting a balanced capital mix.
- Sector standouts included:
- Proptech: $75M (3 deals)
- Fintech: $85.3M (10 deals)
- E-commerce: $24.8M (7 deals)
Egypt’s resilience lies in its scrappy, problem-solving founders, many of whom are tackling complex infrastructure gaps with simple tech solutions.
Gender Gaps Persist — But Mixed Teams Are Gaining Ground
Across the region, funding is still heavily skewed toward male-led ventures.
- Male-only teams received 89% of total capital in H1 2025.
- Female-led startups raised $84.5M across 27 deals.
- Mixed-gender teams raised $150M, showing potential as a growing middle ground.
- Notably, 3 female-founded startups in Saudi Arabia raised $60M, pointing to emerging momentum.
The numbers remain lopsided, but the growth of mixed and female-led rounds in traditionally male-dominated markets is a step in the right direction.
Sector Trends: Fintech Still Reigns Supreme
Across the MENA region, fintech continues to dominate:
- 77 fintech startups raised 62% of the total capital.
- B2B startups led with $1.5B raised across 197 deals (70% of all capital).
- Other fast-growing verticals include:
- Proptech: $119M
- E-commerce: $65M
- Venture studios: boosted by a single major deal in the iMena Group
Founders building in fintech, infrastructure SaaS, and vertical B2B tools are clearly aligned with investor priorities.
Conclusion
If you’re building in MENA or exploring expansion into the region, here’s what matters most:
- Debt financing is now a major capital path, especially in later-stage growth or revenue-heavy sectors.
- Saudi Arabia is leading on volume, velocity, and ambition. Founders should explore entry points, even if remotely.
- The UAE remains strong in early-stage equity, especially in fintech, insurtech, AI, and Web3.
- Gender disparities persist, but mixed-founder teams are attracting more investor confidence.
- B2B is king, products solving operational pain points at scale are getting funded fastest.
