Saudi, UAE VC funding drops on investor shift

Startups in the region raised $1.5 billion, a decline of 29% compared to the previous year

Venture capital funding in the Middle East reached a new low in 2024, even as the number of deals raised as investors shifted toward early-stage investments. Startups in the region raised $1.5 billion, a decline of 29% compared to the previous year, according to a report from venture capital data platform Magnitt.

Saudi Arabia, which accounted for almost half of that funding, experienced a 44% drop. Still, the kingdom retained its position as the top destination for venture capital funding in the Middle East for the second consecutive year. Meanwhile, the United Arab Emirates saw investments drop 8% in 2024, to $613 million.

The number of venture capital deals rose 10% to 461 transactions, according to the Dubai-based firm. However, the region didn’t see the kind of big-ticket deals that turned Saudi-based fintechs Tabby and Tamara into unicorns in 2023.

Mega-rounds, typically those exceeding $100 million, accounted for less than 20% of total funding last year, down from 30% in 2021, said Philip Bahoshy, the chief executive officer of Magnitt.

This trend reflects a broader shift from large, late-stage rounds toward investments ranging between $1 million and $5 million, as investors grew more cautious in response to the high cost of capital and changing market dynamics, Bahoshy said, in an e-mailed response to questions.

Overall, startups in the Middle East, Africa, South East Asia, Turkey and Pakistan raised $9.1 billion, a 41% decline from 2023, Magnitt’s data showed.