MENA Startup Funding Drops 37% to $941M in Q1 2026 Amid Geopolitical Tensions

Startup funding in the Middle East and North Africa (MENA) fell to $941 million in Q1 2026, marking a 21.5% quarter-on-quarter decline and a 37% drop year-on-year, according to data from Wamda and Boomidd. Escalating geopolitical tensions — particularly between the US, Israel, and Iran — weighed heavily on investor activity across the region.

The year opened strong with nearly $500 million deployed across 59 deals in January. By mid-February, escalating tensions began to dampen sentiment, and February closed at $326.6 million. March recorded one of the weakest funding months in recent years, with just 17 startups raising less than $50 million combined.

The UAE led regional funding with $625.8 million across 46 deals, significantly ahead of Saudi Arabia where 57 startups secured $156.7 million. Egypt ranked third, attracting $86 million across 12 transactions. Morocco showed relative resilience with $22.6 million across six deals, while Bahrain raised $22 million across two transactions.

Fintech retained its position as the leading sector, accounting for 46% of total investment with 25 startups raising the largest share of capital. Proptech followed with $228.6 million across 12 deals, while foodtech secured $60 million through three transactions.

Capital remained heavily skewed toward early-stage startups, with 110 startups raising a combined $233 million. Only seven late-stage rounds were recorded, totaling $113 million — highlighting the continued slowdown in growth-stage capital deployment. The gender gap persisted starkly: just five women-led startups raised capital, securing a combined $500,000.

The Strait of Hormuz disruption had tangible economic consequences beyond sentiment, affecting seaborne logistics and global risk exposure. The outlook for Q2 remains uncertain, with prolonged geopolitical instability expected to continue dampening investor confidence.