Venture capital funding in the Middle East fell in 2024, despite deal volume rising as investors shifted to early-stage investments. Startups in the region raised $1.5 billion, down 29% from the previous year, according to a report by venture capital data platform Magnitt, reported by Bloomberg.
Saudi Arabia, which accounts for nearly half of that funding, saw a 44% drop. Still, the kingdom maintained its position as the top destination for VC funding in the Middle East for the second year in a row. Meanwhile, in the United Arab Emirates, investment fell 8% in 2024 to $613 million.
Venture capital funding in the Middle East has fallen
The number of VC deals rose 10% to 461, according to the Dubai-based firm. But the region has not seen the kind of big deals that have turned Saudi fintech companies Tabbi and Tamar into champions 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 Bahoshi, chief executive officer of Magnitt.
The trend reflects a broader shift away from large, late-stage rounds to investments of $1 million to $5 million as investors have become more cautious in response to the high cost of capital and changing market dynamics, Bahoshi said in an emailed response to questions. For example, Singapore received $3.4 billion in venture capital last year, the highest among the emerging venture capital markets covered by Magnitt. Despite this, the South Asian country’s overall funding fell by 53%.
Startups in the Middle East
Overall, startups in the Middle East, Africa, Southeast Asia, Turkey and Pakistan raised $9.1 billion, a 41% drop from 2023, according to Magnitt. Venture capital exits — a key metric the industry tracks — fell 20% in the Middle East, but that could change in 2025.
“The coming year is expected to bring much-needed liquidity in the form of M&A and regional IPOs, particularly in Saudi Arabia, where Tabby, Tamara, TruKKer, Floward and Unifonic are all candidates for public placement,” Allen Taylor, managing partner at Endeavor Catalyst, said in the report.