MENA Startup Funding Plummets in March

Startup investment in the Middle East and North Africa region fell sharply in March, with total funding declining 76 percent month on month to US$127.5 million across 28 deals, down from US$530 million in February. The decline — observed even after excluding debt financing from both months — reflects broader economic uncertainty stemming from ongoing US trade tensions with global partners. These geopolitical developments have impacted key regional economies, contributing to a 50 percent year-on-year drop in both the volume and value of investments, according to Wamda’s monthly report. February’s funding surge was largely driven by major startup events, including Saudi Arabia’s flagship LEAP conference.

UAE tops regional funding

The UAE retained its lead in regional startup funding, securing US$104.4 million across 14 transactions. Egypt ranked second with US$11.6 million from four deals, followed by Saudi Arabia, which raised US$8 million through five startups. Despite the March slowdown, the first quarter saw robust activity, with MENA startups raising US$1.5 billion — marking a 244 percent increase compared to the same period in 2024.

Fintech leads Q1 surge, SaaS absent for 2nd month

Fintech remained the dominant sector, attracting US$82.5 million across 10 deals in March alone. The sector accounted for over US$1 billion in the first quarter funding across 36 startups, cementing its role as a top investment magnet since 2021. Healthtech and artificial intelligence followed, raising US$16 million and US$14 million respectively. In contrast, software-as-a-service, or SaaS, startups failed to secure funding for the second consecutive month. Early-stage companies captured 70 percent of March funding, amounting to US$58 million, while later-stage firms raised US$46 million, including three Series B rounds. Debt financing also declined sharply, comprising just 12.5 percent of total monthly funding. Business-to-business startups continued to attract the bulk of investor attention, raising US$97 million, while business-to-consumer ventures brought in US$24 million.

Gender funding gap widens; investor caution rises

No female-founded startups received funding in March — a significant setback for gender equity in the region’s entrepreneurial landscape. Male-founded ventures secured US$113 million, with the remainder going to mixed-gender founding teams. The broader investment slowdown is expected to prompt increased investor caution, with a tilt toward later-stage startups that have demonstrated resilience amid macroeconomic headwinds, Wamda noted. Sectors tied to global trade — such as logistics, mobility, and e-commerce — may face continued challenges as new alliances and shifting energy dynamics reshape the global economic order. However, adaptable startups could benefit from emerging opportunities, the report added.