Venture Capital Momentum Returns to the Middle East in 2025

Venture funding activity across the Middle East rebounded sharply in 2025, reaching US$3.43 billion across 581 deals, according to MAGNiTT. The recovery reflects a return of late-stage liquidity, renewed investor confidence, and a more disciplined allocation environment shaped by global macro uncertainty. While capital became more selective, deployment concentrated around sectors demonstrating scale potential, defensibility, and clearer paths to monetization.

Fintech Reasserts Its Lead

Fintech emerged as the region’s dominant venture funding driver, attracting US$1.04 billion in 2025, representing a 164 per cent year-over-year increase. The sector accounted for 152 deals, up 48 percent, underscoring sustained appetite for payment infrastructure, BNPL platforms, lending solutions, and embedded finance models across the GCC. Investors favored fintechs addressing underbanked segments, cross-border payments, and merchant enablement, particularly as regulatory frameworks matured in Saudi Arabia and the UAE.

This concentration also reflects fintech’s central role in enabling broader digital ecosystems, from e-commerce to logistics and SME services, reinforcing its position as the region’s foundational venture category.

Broad-Based Growth Beyond Financial Services

While fintech led in absolute capital, 2025 also highlighted diversification across consumer and enterprise verticals. E-commerce and retail attracted US$494 million, supported by continued digital adoption and improving logistics infrastructure. Sports and fitness startups raised US$309 million, buoyed by regional investments in wellness, entertainment, and lifestyle sectors aligned with national diversification agendas.

Telecoms and communications secured US$236 million, reflecting rising demand for connectivity, data infrastructure, and enterprise communication tools. Meanwhile, enterprise software drew US$184 million, signaling growing interest in B2B platforms focused on efficiency, compliance, and regional digital transformation—albeit with more measured deal sizes and valuation discipline.

Saudi Arabia as the Regional Anchor

Saudi Arabia led Middle East venture activity in 2025, raising US$1.72 billion across 257 deals. The Kingdom ranked first in both funding volume and transaction count, benefiting from policy-driven ecosystem development, increased foreign participation, and a surge in mega-deals that together totaled a record US$1 billion across the region.