UAE Dominates as MENA Funding Slows in 2026

Startup funding across the Middle East and North Africa slowed sharply in Q1 2026, with the region raising $941 million — a 21.5% decline from the prior quarter and a 37% year-on-year drop, according to reporting by Rafiqul Islam. The United Arab Emirates continued to dominate the market, contributing $625.8 million across 46 deals and absorbing the largest share of capital amid a broader pullback driven by rising geopolitical tensions.

"This shows that even during uncertainty, investors still trust the UAE market," Rafiqul Islam wrote, highlighting the emirates' resilience thanks to strong infrastructure, business-friendly policies and continued access to global capital.

Quarterly and monthly dynamics

Islam’s report — which also reviewed Wamda’s monthly reports for deeper context — charts how investor sentiment deteriorated over the quarter. January saw nearly $500 million invested across 59 deals, but funding fell to $326.6 million in February as tensions increased. March recorded a sharp slowdown: only 17 startups raised less than $50 million in the month, illustrating how quickly funding momentum evaporated as geopolitical risks intensified, including conflicts involving the United States, Israel and Iran and disruptions around the Strait of Hormuz.

Where the money went

• UAE: $625.8M across 46 deals
• Saudi Arabia: $156.7M across 57 deals
• Egypt: $86M across 12 deals
• Morocco: $22.6M
• Bahrain: $22M

Sector allocation shows concentration in a few verticals. Fintech led the quarter, accounting for 46% of total funding. Proptech attracted $228.6 million, while foodtech secured $60 million. Early-stage activity remained meaningful, with 110 deals totalling $233 million, even as late-stage rounds thinned to just seven deals raising $113 million.

Deal type and demographic trends

• B2B startups led in deal volume: 74 deals worth $199 million.
• B2C startups drew the majority of capital: 43 deals raising $564.6 million.
• Gender gap: only five women-led startups raised a combined $500,000 versus roughly $924 million raised by male-founded startups (98% of total).

"The funding gap between male-led and women-led startups remains one of the biggest challenges in the ecosystem," Islam notes, pointing to limited networks, fewer large-round opportunities, and bias in decision-making as persistent barriers.

Outlook: investors have become more selective, favouring safer sectors and earlier-stage, lower-ticket rounds. UAE startups retain an advantage but will need to demonstrate clear revenue models and strong fundamentals as late-stage capital tightens. As Islam concludes, capital is still flowing in the region — but it is increasingly concentrated in fewer markets, safer sectors and smaller, high-conviction bets.