MENA startup funding drops to $326.6m in February as investment pace slows

Startup investment across the Middle East and North Africa (MENA) slowed in February 2026, with companies raising $326.6 million across 62 transactions, Funds Global MENA reported. The total represented a 42% decline from January and a 38% drop year‑on‑year. Debt financing accounted for just 16% of capital deployed, while equity remained the dominant instrument.

"Debt financing accounted for only 16% of total capital deployed, suggesting that investors in the region continue to prioritise equity investments over alternative financing methods," Funds Global MENA said.

Regional and sector breakdown

• United Arab Emirates: 23 startups raised $162.8 million — nearly half of MENA’s February funding.
• Saudi Arabia: 25 startups secured $87.7 million.
• Egypt: Six deals raised $64 million, largely supported by a single late‑stage investment.
• Fintech: The top sector by value, attracting $94.7 million across 14 deals.
• E‑commerce: Re‑entered the top three with $52 million across three deals, largely driven by Breadfast’s round.
• Deeptech: Raised $51 million through two transactions.

February featured a notable absence of mega rounds. Only two later‑stage transactions were recorded: Breadfast’s $50 million pre‑Series C and Stake’s $31 million Series B. Instead, early‑stage companies dominated deal flow — 49 startups raised $136.4 million in total — underscoring continued investor interest in nascent ventures even as large checks became rarer.

Investor preferences and diversity concerns

• B2B startups captured the largest share of activity, accounting for 38 of the 62 deals and raising $137 million.
• B2C businesses raised $62 million across 18 deals; the remainder went to hybrid models.
• Gender diversity lagged: startups founded solely by women received no investment in February. All capital went to male‑led teams, while three mixed‑gender founding teams raised a combined $14 million.

The report argued the February decline was more structural than symptomatic of a wholesale pullback. "The decline in funding during February appears to be driven more by structural factors than a broader downturn in investor interest," Funds Global MENA noted, pointing to the concentration of early‑stage deals and the lack of large transactions as evidence of greater selectivity among investors.

Geopolitical developments also likely played a role in near‑term caution. Funds Global MENA referenced heightened tensions at the end of the month following US‑Israeli strikes on Iran, which may have prompted regional and global investors to reassess short‑term risk exposure.

Despite the month‑on‑month slowdown, the medium‑term outlook remains constructive: several regional venture capital firms closed new funds toward the end of 2025, leaving fresh capital available for future rounds. The report suggests that while monthly investment figures will fluctuate, capital commitments and ongoing interest in fintech, deeptech and early‑stage innovation point to continued activity in MENA’s startup ecosystem.