UAE leads MENA startup funding in Q1 2026, raising $625.8 million across 46 deals

Startups in the United Arab Emirates led MENA funding in Q1 2026, raising $625.8 million across 46 deals as the region recorded $941 million in total funding for the quarter, a 21.5 percent quarter-on-quarter decline and a 37 percent year-on-year drop, according to a Wamda report highlighted by Yara Abi Farraj. The contraction came as escalating geopolitical tensions and supply-chain disruptions weighed on investor sentiment and deal activity.

"Just 17 startups raised less than $50 million in total in March, reflecting a near standstill in deal activity," the report noted, capturing the sharp slowdown that followed a relatively strong January.

January optimism gave way to geopolitical headwinds

Wamda’s data show the year opened with nearly half a billion dollars deployed across 59 deals in January, but by mid-February rising tensions between the U.S., Israel and Iran undermined investor appetite. The report cites tangible economic consequences from the conflict, including disruptions to seaborne logistics after Iran's blockade of the Strait of Hormuz, which "heightened global risk exposure and reinforced investor caution across the region."

Country-level performance was uneven. After the UAE, Saudi startups raised $156.7 million across 57 deals, while Egyptian startups attracted $86 million in 12 transactions. Morocco showed resilience with $22.6 million across six deals — driven largely by Yaakey’s $15 million Series A in January — and Bahrain recorded $22 million from two transactions.

Sectoral and stage breakdown

• "Fintech once again led sectoral funding, accounting for 46 percent of total investment, with 25 startups raising the largest share of capital."
• Proptech secured $228.6 million across 12 deals, and foodtech raised $60 million through three transactions.
• Debt financing accounted for just 11 percent of total funding in Q1.
• Early-stage activity dominated by count: 110 startups raised a combined $233 million. By contrast, seven late-stage rounds accounted for $113 million, underscoring a slowdown in growth-stage capital deployment.
• B2B startups led deal activity with 74 transactions worth $199 million, while B2C startups captured the majority of capital — $564.6 million across 43 deals.

The report also highlighted stark funding disparities by gender: "Only five women-led startups raised capital during the quarter, securing a combined $500,000," while male-founded startups accounted for roughly 98 percent of total funding, raising about $924 million.

Outlook

"The outlook for MENA startup funding in the second quarter remains uncertain," the Wamda report warned, pointing to prolonged geopolitical instability, elevated oil prices and possible inflationary pressures — particularly in fragile economies such as Egypt — as headwinds likely to keep investors cautious. The report anticipates a moderation of the recent investment momentum in the GCC as deployable capital is delayed pending greater clarity on the regional security landscape.