The United Arab Emirates and Saudi Arabia accounted for almost 90% of startup funding across the Middle East and North Africa in the first nine months of 2026. Regional startups raised $2.98 billion during the period, according to venture capital tracker MAGNiTT.
The two Gulf nations also accounted for every funding round worth $100 million or more. However, the overall market showed signs of weakness. Total funding fell 7% from the same period last year, while the number of deals dropped by about one-third.
The figures point to a growing gap between large, established startups and smaller firms seeking their first major investments. A small group of companies in fintech and logistics attracted much of the available capital. These businesses have already shown that they can grow and compete in their markets.
For early-stage startups, the picture was less positive. Fewer companies secured early funding, leaving a smaller group ready to seek larger investment rounds in 2027.
The decline could affect the wider startup market in the months ahead. Young companies often need several rounds of funding to develop products, hire staff and expand into new markets. When early investment slows, fewer firms may reach the stage where they can attract larger funds.
The latest figures also show how much the regional market depends on the UAE and Saudi Arabia. Both countries have become key centers for business growth and investment in the Gulf. Their large funding rounds helped support the regional total, even as the number of deals fell.
Investors from within the Gulf are also playing a larger role in supporting startups. Capital from regional sources is helping fill a gap left by investors from outside the region.
Foreign investors are facing concerns about how easily they can sell their stakes and recover their money. This process, known as an exit, is a key part of venture capital investing.
Investors often expect to earn returns when a startup is bought by another company or lists its shares on a stock market. When such deals are rare, investors may become less willing to commit new money.
The shortage of company sales has therefore become a concern for the region’s startup market. Without clear ways to exit investments, outside funds may take a more cautious approach.
This can make it harder for young businesses to raise capital, even when their products show promise. It may also place more pressure on Gulf investors to support companies that need funding to survive and grow.
The decline in deal numbers adds to these concerns. Even though the UAE and Saudi Arabia attracted most of the capital, the wider market saw fewer investment deals. This suggests that funding was concentrated in a smaller number of companies rather than spread across many startups.
Large funding rounds can lift total investment figures. Yet they do not always show whether smaller businesses can find enough money to develop new products or reach more customers.
Fintech and logistics companies were among the main beneficiaries of the larger rounds. Both sectors can attract investors when firms have established operations, a clear customer base and room to expand.
However, the slowdown in early-stage deals could create problems for future growth. Companies that fail to secure their first rounds may never reach the point where they can attract major investors.
The figures come as Gulf countries seek to expand their role as global business and technology centers. Support for new companies can help create jobs, encourage new ideas and reduce reliance on older industries.
The UAE and Saudi Arabia remain central to that effort. Their ability to attract large investments has helped keep regional startup funding near $3 billion despite the fall in deal activity.
Still, the latest data points to a market with uneven growth. Established companies continue to attract large sums, while younger firms face a harder path to funding.
The outlook for 2027 may depend on whether early-stage investment returns and more startup sales give outside investors greater confidence. Until then, regional capital is likely to remain important for businesses seeking to grow.
The funding figures show that the Gulf remains a major source of startup investment in the region. But the drop in deals suggests that strong totals alone may not reflect the health of the wider startup sector.
