MENA VC funds sit on USD 1.5 bn as deployment lags

MENA-focused venture capital funds are sitting on roughly USD 1.45 billion in dry powder — capital committed but not yet deployed — out of USD 1.64 billion raised across 17 funds since 2024, leaving 88% of the capital on the sidelines, a regional fundraising snapshot shows. Of the USD 1.64 billion target, only USD 197 million had been invested by the first half of 2026, with much of that deployment concentrated in Saudi Arabia, the UAE and Egypt.

"Don't read the 2026 funds as war-proof," said Magnitt, noting that "the three funds added this year, despite the US‑Iran war and the Houthi threats, likely reflect fundraising processes started before the conflict. On its assumed six‑to‑nine‑month transmission lag, Magnitt sees the war’s real effect on new fund formation surfacing in 2H 2026 and early 2027."

Deployment concentrated and front-loaded

The bulk of what has been deployed so far is flowing to the region's more established markets. Of the USD 60 million that funds launched in 2026 deployed in the first half of the year, USD 33 million went to Saudi startups, USD 7 million to the UAE, and USD 20 million was spread across other MENA markets. The data also underline how early most of the newly raised funds remain: 10 of the 17 identified vehicles have committed less than 10% of their target, leaving more than 90% of their capital available for future investments.

• Total target across 17 funds since 2024: USD 1.64 billion
• Dry powder remaining: USD 1.45 billion (88%)
• Deployed by 1H 2026: USD 197 million
• Number of funds identified: 17
• Funds with explicit AI mandates: 4

Largest funds and sector focus

The largest vehicles in the pool skew toward the UAE. BECO Capital’s Booster Growth Fund I leads the pack with a USD 250 million target across the 2024–1H 2026 period, followed by Shorooq Partners’ Late Stage Growth Fund at USD 200 million and Oman’s Jasoor Fund at USD 180 million. Four of the 17 funds carry an explicit AI mandate, reflecting investor interest in artificial intelligence-focused strategies even as overall deployment remains slow.

Fund formation accelerated quickly: six active funds in 2024 held a combined USD 572 million with only USD 42 million deployed. By 2025, the cumulative count rose to 14 funds targeting USD 1.28 billion — 89% of which remained undeployed — and three more funds in the first half of 2026 added USD 370 million, all of it still dry powder.

Outlook: timing, matching capital to founders

A USD 1.45 billion cushion looks sizable on paper, but its impact depends on deployment pace, mandate alignment, risk appetite and geographic match to founders' needs. Magnitt’s warning about a delayed shock from regional conflict adds uncertainty: if fundraising and deal activity slow in the latter half of 2026 and into early 2027, capital raised now may sit unused longer or may not reach the founders and stages that need it most. How quickly the region’s venture ecosystem converts dry powder into active backing will determine whether the current pool of commitments translates into growth for MENA startups or remains parked on the sidelines.