How Has the 2026 Iran War Affected the Gulf's Startup Market? Experts Have Their Say

Venture funding across the Middle East fell in the first half of 2026 even as founders largely remained in Gulf markets through a conflict that began on February 28. Two regional trackers reached different tallies — MAGNiTT recorded $1.35 billion raised across MENA, down 22% year‑on‑year with 214 deals (a 41% fall), while Wamda counted $1.7 billion across 242 rounds, an 18% decline — but both show capital clustering in a small number of very large rounds and a weakening middle market. Hub71’s February intake drew nearly 2,500 applicants for 27 places; the Mubadala‑backed programme pays each startup AED 250,000 in cash and AED 250,000 in services (about US$136,000 total), and none of its cohort withdrew after strikes began.

“People think a war scares the money off. It doesn’t, not really, it’s just numbers on a screen,” said Jeremy Savory, who relocated to Dubai to build residency advisory Savory & Partners. “What takes a hit is trust, people being willing to show up and sit across a table from each other, and that’s the part that takes ages to come back.”

Context and detail

Founders such as King Lai, who arrived in Abu Dhabi from Hong Kong in February and was admitted to Hub71’s cohort, stayed, signed local customers and began courting Emirati venture funds even after Iran’s strikes on Gulf capitals. Observers stress that much of the first‑half slowdown predates the war: venture rounds typically take six to nine months to close, so H1 figures largely reflect 2025 decisions. Early‑stage dealmaking, which tracks current appetite more closely, has already fallen by more than half year‑on‑year, and two rounds worth a combined $480 million propped up headline totals. The ten largest deals consumed 58% of all capital in the period.

• Mergers and acquisitions fell 56% to 16 transactions in H1.
• Foreign investor participation roughly halved versus prior periods.
• Qatar Investment Authority tripled its Fund of Funds to $3 billion from $1 billion; around a third of that has been committed so far.
• Startup Qatar has fielded more than 7,700 applications and, by Bloomberg’s count, paid $51 million to 45 firms, 11 of them since the fighting began.
• Golden Gate Ventures moved partner Michael Lints from Singapore to Doha in 2024 to run a $100 million MENA fund raised from Qatari families.

Governments have deliberately tied capital to physical presence. Hub71, Startup Qatar and other Gulf programmes typically require at least one founder to be resident; residency and long‑term permits — from the UAE golden visa to Saudi Arabia’s Premium Residency and Qatar’s new 10‑year entrepreneur residency — make relocation a planned, durable move. Savory notes that investors often back founders who have relocated because “if you’ve moved the family over, put the kids in school, taken a lease, you’re not going to bolt the second things get hard.”

Outlook

Entrepreneurs are also hedging on paper. Elena Ruda, co‑founder and managing partner of Immigrant Invest, says enquiries for second residencies and passports from UAE‑based clients roughly doubled since March (from about 7% of the pipeline to 15%), and among entrepreneurs enquiries tripled by April. Interest from Qatar “more than quadrupled,” she said, with regional security raised in more than a third of conversations and about one in five Saudi clients expressing similar concerns. Ruda emphasises that most see second residencies as risk management rather than an exit: “For the large majority, this is additive, not a substitute. They’re not closing their UAE operations or relocating away from the region.”