UAE Startup Funding Poised for Major Growth in Q4 2024 and Through 2025

Khaled Talhouni of Nuwa Capital

The UAE and the GCC region are gearing up for a significant surge in startup funding, driven by the reversal of interest rate cycles, which is making equity funding more appealing to investors. According to experts, venture capital (VC) and private equity (PE) funding in the UAE is expected to more than triple, reaching $2 billion by the end of 2024, compared to $638 million in 2023. Projections suggest further growth to $2.5 billion in 2025.

Global investors are increasingly drawn to the region’s promising growth potential, supportive regulations, and burgeoning tech ecosystem. However, experts predict a shift in funding strategies, with investors seeking safer instruments that combine cash flow stability with equity growth opportunities, such as warrants.

Khaled Talhouni, Managing Partner at Nuwa Capital, highlighted the role of national budgets and oil prices in influencing investment trends. Meanwhile, Sharaf Sharaf, Fund Head at Amplify Growth Partnership, noted a shift toward revenue-generating startups as the era of cheap capital ends.

The tech startup ecosystem saw a steep drop in funding in 2023, falling by 65% to $638 million, according to Tracxn. However, signs of recovery have emerged in 2024, with UAE startups raising an estimated $690 million in the first nine months of the year.

Source: James Mathew / Reuters