Saudi Arabia outstrips UAE startup funds but trails on AI

Saudi startups attract the region’s most venture capital funding, but in AI they trail the UAE, which benefits from an earlier build-out

Lead

Saudi Arabia’s startup sector attracted more venture capital than the UAE in 2025, but when it comes to artificial intelligence the UAE is the clear leader, new data and industry commentary show. AI-native and AI-enabled startups across Mena raised $858 million last year — 22% of the region’s total VC funding, according to calculations from Magnitt — yet UAE companies captured 60% of that AI funding while Saudi startups took 29%. Wamda reported that Saudi startups raised more than double their Emirati counterparts overall in 2025.

Direct quote

"On a high level, the UAE and KSA have differentiated strategies when it comes to developing their AI ecosystems," Sam Marchant, founder of Dubai-based VC Forward Pursuit, said. "KSA has prioritised the development of foundational infrastructure."

Context and details

Analysts and industry data point to a split strategy: Saudi Arabia is pouring resources into building AI compute and data-centre capacity, while the UAE has focused on quick adoption and commercialisation. Digital Bricks, an AI development and adoption company, estimates Saudi Arabia will bring online about 2.2 gigawatts of AI compute capacity in the coming years, compared with roughly 500 megawatts in the UAE — less than a quarter of Saudi capacity.

  • AI funding in Mena (2025): $858 million (Magnitt).
  • Share of regional AI funding: UAE 60%, Saudi 29% (Magnitt).
  • AI compute capacity expected: Saudi 2.2 gigawatts vs UAE ~500 megawatts (Digital Bricks).
  • Generative AI adoption by end-2025: UAE 64% of working-age population, Saudi 26% (Microsoft).
  • AI deal count change year-on-year: Saudi +79%, UAE -4% (Magnitt).

Marchant said the UAE’s earlier build-out and adoption are helping entrepreneurs validate and scale faster: "Entrepreneurs can ideate, validate and scale AI startups within the UAE easier and quicker than in Saudi Arabia," he said. The Microsoft adoption data underscore that dynamic — the UAE ranked as the top country globally for AI adoption, with 64% of the working-age population using a generative AI product by the end of 2025, versus 26% in Saudi Arabia.

Outlook

Despite the UAE’s current lead in AI funding and adoption, investors and VCs caution the gap is not inevitable. "The UAE has a few years’ 'head start', but Saudi Arabia’s AI deals are accelerating fast," Lucy Chow, a limited partner at London-based early-stage fund Pact VC, said. Magnitt’s numbers show Saudi Arabia’s AI deal count climbed 79% year on year even as UAE deal counts edged down, suggesting capital in the UAE may be concentrating into larger rounds.

Chow warned of risks associated with concentration: "Concentration in any sector increases volatility. The UAE will be impacted if some of the predicted AI corrections take place, simply because it is weighted heavier," she said. She added that Saudi’s momentum could close the gap: "Saudi’s accelerating deal flow suggests it is very close on the heels of the UAE in terms of reaching parity in terms of AI sector growth and ambition," she said. "Currently, the UAE is ahead, but this is one year’s worth of funding data. What will happen next year and the year after?"