From founder formation to exits: where MENA’s venture capital journey needs to go next

Startups across the Middle East and North Africa raised $3.8 billion across 688 deals in 2025, a 74 percent year-on-year increase, while international investors accounted for 49 percent of capital deployed. Yet the regional venture market remains small relative to the economies it aims to transform: Saudi Arabia and the UAE together captured 86 percent of MENA venture funding in 2025, receiving $1.72 billion and $1.58 billion respectively, highlighting a concentration that leaves much of the region undercapitalised.

"The depth gap is real and visible in the data," said Philip Bahoshy, CEO of MAGNiTT. "Between 2020 and 2025, the UAE’s VC-to-GDP ratio reached 0.2 percent, while Saudi Arabia’s was 0.07 percent. By comparison, VC accounts for 0.8 percent of US GDP and 1.2 percent of Singapore’s over the same period."

The figures underline two linked challenges: capital concentration and stage depth. While headline funding growth is notable, it masks MENA’s limited scale versus global venture markets. CB Insights estimated US startups raised $328 billion in 2025 — roughly 70 percent of global venture funding by that measure — meaning MENA’s $3.8 billion represented barely more than one percent of US venture funding. Other trackers give slightly different global totals, but the direction is consistent: venture recovery has been led overwhelmingly by the US, leaving MENA as a small share of the global pie.

Stage depth is a particular vulnerability. MAGNiTT data shows early-stage activity has grown, but later-stage rounds remain heavily dependent on foreign capital: 44 percent of late-stage capital over the past five years came from outside the region. In 2025, international investors represented 69 percent of Series A and 48 percent of Series B and beyond, a dynamic that makes MENA sensitive to shifts in global sentiment. During the 2023 slowdown, international participation in late-stage rounds dropped to just 17 percent, illustrating how quickly external retrenchment can tighten the market.

Deployment patterns also highlight a disconnect between available funds and money reaching founders. Sovereign wealth funds, family offices, funds of funds and corporate venture arms have increased the pool of dry powder, but that capital has not automatically converted into deployed checks. "The dry powder is not absent. It is looking to identify where the investment opportunities are," Bahoshy said, noting that longer diligence cycles and selectivity followed the valuation reset of 2022–2024.

Where the market must grow next

• Broaden capital absorption beyond the GCC: Egypt, Jordan, Morocco, Bahrain and Qatar are producing founders and policy measures, but have yet to absorb capital at scale.
• Develop late-stage domestic capacity: increasing regionally based growth capital would reduce reliance on international investors for Series A and later rounds.
• Create clearer exit pathways: Bahoshy emphasised the need for exits that return capital to founders, employees, governments and investors.
• Speed deployment into promising companies: translating institutional dry powder into founder bank accounts will require faster decision-making and better deal pipelines.

The US market illustrates the scale that MENA has not yet achieved: in 2025, PitchBook and Crunchbase data show outsized allocations to a handful of companies that skew aggregate totals. For MENA, the lesson is to build both depth and breadth — not only more capital, but more domestic mechanisms and markets that let startups scale and exit locally and regionally. As Bahoshy put it, "We need to continue seeing clear exit pathways for companies that can return investments to founders, employees, governments, and investors alike."