Startup investment across the Middle East and North Africa (MENA) experienced a slowdown in February 2026, following a stronger start to the year.
During the month, startups secured a total of $326.6 million across 62 transactions, representing a 42% decline from January and a 38% decrease compared with the same period last year.
Despite the drop in overall funding, the structure of investments remained broadly consistent. Debt financing accounted for only 16% of total capital deployed, suggesting that investors in the region continue to prioritise equity investments over alternative financing methods.
UAE remains the region’s leading funding hub
The United Arab Emirates continued to dominate the regional funding landscape. A total of 23 UAE-based startups raised $162.8 million, representing nearly half of the capital invested across MENA in February.
Saudi Arabia ranked second, with 25 startups securing $87.7 million in funding. Egypt placed third, raising $64 million from six deals, largely supported by a single late-stage investment.
Fintech leads sector funding as e-commerce rebounds
Fintech remained the most attractive sector for investors, drawing $94.7 million across 14 deals. The sector’s ongoing prominence reflects its central role in the region’s digital transformation, particularly in areas such as payments infrastructure, lending solutions, and the digitisation of financial services.
E-commerce also re-emerged among the top three funded sectors after a quieter period in recent months. The category attracted $52 million across three deals, largely driven by Breadfast’s funding round.
Deeptech secured third place, raising $51 million through only two transactions, highlighting sustained investor interest in technologically advanced and capital-intensive ventures.
Early-stage startups dominate deal flow
February was also marked by a lack of mega deals, unlike several months in 2025. Only two later-stage transactions were completed during the period: Breadfast’s $50 million pre-Series C funding round and Stake’s $31 million Series B raise.
Instead, early-stage startups accounted for the majority of deals. A total of 49 companies raised $136.4 million, indicating that while investors may be cautious about deploying large amounts of capital, confidence in early-stage innovation across the region remains strong.
B2B startups capture the largest share of funding
Investor preferences continued to favour business-focused startups. B2B companies accounted for 38 of the 62 deals completed in February and attracted $137 million in total funding.
In comparison, B2C startups secured $62 million across 18 deals, while the remaining investments went to companies operating hybrid business models.
Female founders remain underfunded
The funding gap for female entrepreneurs remained stark during the month. Startups founded solely by women did not receive any investment in February, including through accelerator programmes.
All capital deployed went to male-led startups, while only three startups with mixed-gender founding teams secured funding, collectively raising $14 million.
Outlook for the months ahead
The decline in funding during February appears to be driven more by structural factors than a broader downturn in investor interest. The absence of large transactions and the concentration of early-stage deals suggest that investors are becoming more selective rather than withdrawing from the market altogether.
Geopolitical developments may also have contributed to short-term caution. Tensions increased toward the end of the month following US-Israeli strikes on Iran, potentially prompting regional and global investors to reassess near-term risk exposure.
Nevertheless, the long-term outlook for venture investment in the MENA region remains positive. Several regional venture capital firms closed new funds toward the end of 2025, leaving significant capital available for future investments. Historically, the region’s startup ecosystem has shown resilience during periods of geopolitical uncertainty, indicating that while monthly investment activity may fluctuate, the broader growth trajectory of MENA venture funding remains intact.
