#SaudiArabia Becomes Biggest Emerging Market For VC Fundraising - Bloomberg

Saudi Arabia Becomes Biggest Emerging Market For VC Fundraising - Bloomberg

Venture capital investment in the Middle East and North Africa surged in the first quarter as interest rate cuts boosted sentiment.

Startups in the region raised $678 million, the strongest quarter since the end of 2023, according to data platform Magnitt. The median deal size rose, reflecting an increase in the capital flowing to larger startups.

Saudi Arabia held the top spot for MENA investment and ranked first globally among emerging markets, attracting $391 million, Magnitt said. The United Arab Emirates raised about half of that.

The Middle East defied a broader slowdown in fundraising across emerging markets, thanks in part to active sovereign wealth funds and events in Riyadh and Dubai that catalyzed activity, according to Magnitt. That momentum is now under threat, it said, as US tariff policies create global uncertainty and declining oil prices threaten to weigh on investment decisions at funds like Saudi Arabia’s PIF.

“In venture capital, this uncertainty is likely to impact three areas: the deployment of capital from LPs to VCs, VC’s willingness to make decisions in uncertain times and finally, startups’ ability to raise funds,” said Philip Bahoshy, chief executive officer and founder of Magnitt.

Strong local capital and pro-startup government policies still position the region for long-term growth and tech-led sectors look poised to attract fresh capital, Bahoshy said.

Fintech funding accounted for 57% of all VC capital raised in the MENA region in the first quarter, led by Saudi Arabia-based Tabby’s $160 million funding round. The enterprise software and education technology sectors also experienced strong growth, while e-commerce and retail slowed, Magnitt said.

Among the region’s most active investors were Blue Pool Capital, Wellington Management and Saudi Arabia’s STV and Hassana Investment Co.

The Middle East and Africa also had a record number of mergers and acquisitions in the first quarter. The total regional deal count more than doubled from a year earlier to 21, Magnitt said. Egypt and the UAE led the way with nine deals each.