Gulf startups are staying private for longer

Gulf startups are remaining private for longer as weaker exit activity and public market volatility narrow the window for venture capital exits, according to data from private capital tracker PitchBook. The UAE is the only Gulf country in PitchBook’s top 20 venture capital markets, yet VC exit value in the region is low — just $402 per capita versus roughly $8,000 in Singapore and $12,600 in the United States. The subdued market has been amplified by geopolitical uncertainty tied to the war in Iran, which has prompted both local and foreign investors to delay or downsize exits.

“Everything is AI”

“Everything is AI,” Nalin Patel, director of research for EMEA private capital at PitchBook, told Semafor. He said US dominance in AI is channeling investment toward a handful of marquee companies — notably OpenAI and Anthropic — and away from regional markets. That concentration, combined with investors’ hesitation about when to list, is keeping Gulf founders and backers on the sidelines.

Context and details

PitchBook’s analysis highlights a global pullback in exits and IPOs as public market swings and blockbuster listings elsewhere affect sentiment. Patel noted that as major AI players prepare for potential public listings, investors are adopting a wait-and-see approach. “The single biggest challenge is geopolitical uncertainty,” Patel said, adding that the war in Iran has directly impacted exits by reducing domestic investor appetite and making foreign buyers cautious about Middle East listings or buyouts. He also said that after the initial shock the region has largely returned to “business as usual.”

Exits are viewed as central to building the region’s entrepreneurial ecosystem by recycling capital and creating new generations of founders and backers. The 2019 acquisition of Dubai-based Careem by Uber for $3.1 billion remains a landmark example; the buyout made 75 of Careem’s employees millionaires and helped seed future entrepreneurs and investors across the Gulf.

But the Gulf’s relatively young venture ecosystem is more sensitive to shocks and, like parts of Asia, tends to demand higher transparency and financial disclosure for listings. That can complicate valuation and readiness when companies aim to go public or pursue strategic sales. Patel emphasized that the lack of exits is not necessarily a reflection of company quality: “It’s because of market conditions. No one really wants to list at the moment.”

• UAE: only Gulf market in PitchBook’s top 20 VC markets
• VC exit value per capita in the Gulf: $402
• Comparators: Singapore ~$8,000 per capita; US ~$12,600 per capita
• Notable regional exit: Careem sale to Uber for $3.1 billion (2019), 75 employees became millionaires

Outlook

Investors will closely watch the market performance of major prospective IPOs — Patel singled out SpaceX and potential listings from frontier AI companies — as bellwethers for broader exit momentum. A series of successful debuts could restore confidence and widen exit opportunities in the Gulf, while weak performances would likely prolong the period in which startups stay private. Separately, Saudi Arabia’s stock market regulator has opened an inquiry into the poor performance of recent IPOs as authorities seek to stimulate trading and encourage more listings, a move that market participants will monitor for signs of policy response to restart the exit pipeline.