Start-ups from the fintech, media, and food sectors, among others, have all reported growth, highlighting the development and influence of start-ups in the MENA region.
Amidst all the global economic chaos caused by wars, escalating trade wars and sanctions, there is some good news in the Middle East and North Africa (MENA) region. The start-up sector has ended this year’s first quarter, having gained significant momentum with high-value deals, strategic acquisitions, and international expansion plans across various industries.
Start-ups from the fintech, media, and food sectors, among others, have all reported growth, highlighting the development and influence of start-ups in this region. In February alone, MENA start-ups recorded an influx of $494 million in investments, across 58 deals. In January while debt financing comprised nearly 90% of total investments, the figure did dip significantly the following month, making up only 15% of the total investment. Excluding debt from both months, February witnessed a 371% month-on-month (MoM) increase in investment.
Fintech has undoubtedly recorded the largest growth, securing investments of approximately $274 million through 15 deals in February alone. The fintech sector is leagues ahead of the remaining sectors, with Insurtech at the second position, gaining $55 million raised across two deals. This was closely followed by the logistics sector, which was able to secure $28.5 million in four deals.
Q1 of 2025 has been marked with several lucrative deals signed across the region. In January, it was announced that Orbit Startups and Sanabil Investments would launch the Sanabil Accelerator by Orbit, which would focus on supporting early-stage start-ups in the MENA region, and companies which are looking to set up their bases in this region.
The start-ups which participated in this event were promised an initial investment of $100,000, access to follow-on funding, and a four-month training program focused on sales, marketing, and product development. This enthusiasm to support newly emerging companies highlights the region’s confidence in the start-up sector’s potential.
Local and global investors are flocking to the MENA region, making it a hub for capital, which these early-stage companies require to carry out their operations, venture into untapped fields and markets, and innovate and hire new talent. Market analysts began predicting in 2024 that tech IPOs (Initial Public Offerings) would rise, particularly in Saudi Arabia, where over 13 start-ups are expected to go public by 2026.
Saudi Arabia and the UAE have been the top earners, attracting the most investments in the MENA region. In September 2024, Rasmal reported that Saudi Arabia secured $165.34m in funding which tallies to more than half of the total capital raised across 13 startups in MENA. Riyadh and Jeddah are the Kingdom’s emerging start-up hubs, supported by government initiatives and private funding. This surge in investment is a key component of the Saudi Vision 2030, whose mission is to diversify the country’s economy.
The same report also underscored the UAE’s achievement, having brought in $114.32m in total investments. FinTech, e-commerce, and property technology (PropTech) are the most attractive sectors for funding, and Dubai, with its business-friendly policies and geostrategic location is making the Emirates a start-up heaven.
The reason the start-ups here are gaining traction is because they aim to address the MENA region’s challenges. Companies are aggressively working towards improving energy efficiency, making digital payments more widespread and mainstream, or making bold innovations within the healthcare sector. Companies boast of using AI and blockchain technology to come up with long-term solutions.
While the start-up sector is certainly soaring, it is not the only one witnessing an uptrend. Despite the geopolitical conflict raging on for nearly two years in the region, growth has persisted. The IMF anticipates a 3.8% GDP growth in the region this year, in contrast to the 1.9% in 2024.
The primary drivers of this growth are the region’s largest economies- UAE, Saudi Arabia and Egypt. While oil was initially the region’s primary source of income, the focus on economic diversification is certainly yielding positive results. One can only hope that despite the impending economic upheavals, the region will continue to meet its growth targets.
