UAE Series A rounds halved in 1H as startups struggle to find investors willing to lead - UAE

UAE Series A rounds halved in 1H 2026 as investors pull back from lead roles

UAE startups raised USD 895 million in the first half of 2026, a 53% year‑on‑year increase in total capital even as transaction volumes fell 37%. Despite the headline growth, Series A activity halved in 1H as the number of rounds dropped and Series A funding fell around 20%, driven in part by a concentration of investment into AI firms that took roughly 60% of the available Series A capital.

“We have become much better at funding companies at inception than at financing their next stages of growth,” said Victor Sunyer, partner for growth equity at Nuwa Capital.

The market is being distorted by a smaller pool of lead investors. Magnitt founder and CEO Philip Bahoshy highlighted a shift in investor mix: international investors still made up about 55% of UAE Series A participants in 1H, broadly in line with 2025, but supplied an estimated 35% of the capital. At Series B the share of investors and capital from abroad held at roughly half, closer to historical levels. That fall in foreign check sizes has left regional funds to pick up much of the slack.

• UAE startups: USD 895 million raised in 1H 2026, up 53% y‑o‑y
• Transaction count: down 37% in 1H 2026
• Series A: number of rounds halved; funding down ~20%
• AI companies: ~60% of Series A funding
• Regional VCs: share of UAE startup funding rose from ~20% in 2025 to >80% in 1H 2026

Regional capital has filled some rounds: Bahoshy noted regional investors supplied more than 60% of Series A capital and nearly half of Series B funding in 1H. But that support is heavily concentrated — three BlueFive Capital‑backed transactions, including CargoX’s USD 250 million and Mal’s USD 230 million rounds, accounted for around 60% of total UAE funding in the period. Excluding those large wagers, the foreign share of overall UAE funding moves back toward its five‑year average.

Varun Rekhi, a growth investor at European VC Speedinvest, warned that many UAE companies remain relatively unknown to major overseas funds: “Series A investors say come back with more traction,” he said, “but startups often need more money to produce that traction.” He expects more bridge and pre‑Series A rounds to fill the gap. Speedinvest itself led Keyper’s USD 11 million round in July after nearly a year of diligence; the round included regional backers such as Mashreq’s venture arm, Arab National Bank, Dubai Future District Fund, Property Finder, and Ellington Properties.

Nuwa Capital is experimenting with new structures to address the shortfall: Sunyer described a growth syndicate that brings family offices and other investors into individual transactions, allowing Nuwa to assemble larger checks while giving participants the flexibility to pick companies. “Regional funds do not currently have enough firepower to fill it on their own,” he said, pointing to MENA‑focused VCs sitting on USD 1.45 billion in dry powder that is nonetheless spread across mandates and stages.

Founders that do secure international leads often see different due‑diligence approaches. Omar Abu Innab, co‑founder and CEO of Keyper, said foreign and regional investors asked different questions: “International investors were assessing the market as well as the company. Regional investors already understood the market and were assessing us.”

Outlook: unless more investors prepared to write lead checks and anchor rounds emerge — including sovereign and large institutional backers — the current funnel suggests fewer companies will progress from seed to Series A and beyond, compressing the pipeline of growth‑stage UAE businesses over the next two to three years.