The startup ecosystem in the Middle East and North Africa (MENA) gained significant traction in May 2025, recording $289 million in funding across 44 deals. This performance reflected a 25% surge compared to April and a slight 2% increase from the same period last year. Most of the funding came through equity-based investments, as debt financing contributed just 9% of the total volume.
This renewed momentum highlighted the region’s resilience and evolving maturity, driven by notable rounds in fintech, proptech, and media tech sectors. Egypt reclaimed its crown as the top-funded ecosystem in MENA, with strong contributions from UAE and Saudi Arabia. The month also saw a surprising comeback from Kuwait, which re-entered the investment map after months of subdued activity.
Egypt Reclaims the Funding Crown
Egypt led the regional funding charts, securing a remarkable $125 million in May. This included an impressive $75 million round raised by proptech startup Nawy, which alone accounted for over 25% of the month’s total funding. In addition to Nawy’s milestone, seven other Egyptian startups collectively secured $50 million, bringing activity levels close to those seen last July.
This performance marked a significant rebound for Egypt after several months of limited investment flow. Egypt’s strength continues to lie in its large domestic market, deep talent pool, and expanding network of accelerators and investors.
UAE and Saudi Arabia Maintain Strong Positions
The United Arab Emirates followed Egypt, raising $86.7 million across 14 deals. The country continued to attract consistent investor attention, supported by its business-friendly environment, free zones, and regional investor networks.
Saudi Arabia secured $69 million from 15 deals, keeping pace with its Gulf counterpart. The kingdom maintained its steady momentum despite an ongoing push for diversification through initiatives like Vision 2030. Investment flowed into sectors such as fintech, enterprise SaaS, and logistics.
Kuwait Re-Emerges on the Investment Radar
In an unexpected turn, Kuwait re-entered the regional funding landscape with two startups raising a combined $6 million. Though modest in absolute terms, this development represented a significant move for Kuwait, which typically receives less startup investment than other GCC states.
These deals hinted at a broader ambition to foster innovation and tech-driven entrepreneurship in the country, aligning with broader regional digitalization goals.
AI Buzz Falls Short of Capital Commitment
Artificial intelligence dominated headlines across the GCC in May. U.S. President Donald Trump’s visit to the region, accompanied by prominent Silicon Valley AI executives, sparked major announcements from both Saudi Arabia and the UAE. Leaders unveiled grand initiatives to boost local AI capabilities and infrastructure.
However, actual capital deployment in AI startups did not match the media hype. The sector managed to raise just $25 million across two deals. This gap revealed a clear disconnect between political narratives and investor action. While the announcements hinted at long-term ecosystem development, immediate startup funding in AI remained subdued.
Fintech Continues to Lead
Fintech retained its leadership position among sectors, raising $86.5 million through 14 funding rounds. Investors continued to bet on startups offering digital payment solutions, embedded finance, and neobanking services.
Startups targeting SME financial services and cross-border payments drew significant traction. The capital inflow demonstrated the region’s strong appetite for inclusive, tech-driven financial innovation, especially in underbanked markets.
Proptech and Mediatech Climb the Ranks
Driven by Nawy’s headline-making raise, proptech surged into second place for sectoral funding. Startups in this space tapped into increasing demand for digital property solutions, smart leasing platforms, and virtual home tours.
Mediatech also drew attention with $32 million raised through two deals. The rise of local content creators, influencer marketing platforms, and digital entertainment apps underpinned the sector’s performance.
Contech (construction tech) entered the spotlight with WakeCap, a B2B player focused on labor and site tracking, raising $28 million. These developments underscored a broader investor shift toward enabling infrastructure and workflow technologies in traditional industries.
Early-Stage Dominance and Absence of Late-Stage Deals
Early-stage startups dominated the investment landscape in May, accounting for $161 million of the total raised. The month recorded only one pre-Series C deal, which amounted to $12 million. The lack of late-stage activity reflected ongoing caution among institutional investors and venture capital firms toward larger bets in uncertain macroeconomic conditions.
Seed and Series A rounds remained the core of investment activity, suggesting that investors preferred funding promising startups with scalable models and lower capital requirements.
B2B Startups Attract Majority of Capital
Business-to-business (B2B) startups continued to dominate investor portfolios. In May, B2B-focused ventures secured $157 million across 29 deals. These companies addressed critical enterprise challenges such as procurement, logistics, compliance, and operations, making them attractive for long-term bets.
Startups with hybrid business models (B2B/B2C) brought in $79 million, while consumer-focused (B2C) ventures lagged behind with just $53 million raised by nine companies. Investors favored the predictability, retention, and recurring revenue models offered by B2B startups over the volatility of direct-to-consumer plays.
Gender Disparity in Funding Remains
Gender inequality in startup funding persisted across MENA in May. Startups founded exclusively by men captured 82% of the total capital. In contrast, female-founded ventures attracted only 7%, while teams with both male and female co-founders secured 11%.
This imbalance highlighted a pressing need for ecosystem reforms, including more gender-diverse investor networks, targeted accelerator programs, and greater visibility for women-led startups. The funding gap suggests systemic challenges that hinder women entrepreneurs from accessing capital at the same rate as their male counterparts.
Conclusion: Momentum Builds, Gaps Remain
May 2025 brought renewed momentum to the MENA startup ecosystem. A 25% monthly growth and a modest annual increase marked a positive turn, fueled by strong early-stage activity and sectoral diversification. Egypt’s resurgence, consistent performance from the UAE and Saudi Arabia, and Kuwait’s re-entry all pointed to a region ready to compete globally.
However, gaps remain. Despite heavy attention, AI startups failed to attract significant funding. Gender disparities continue to shadow ecosystem progress. Late-stage deals also stayed scarce, indicating risk aversion among growth-stage investors.
To sustain this momentum, stakeholders must convert high-level initiatives into tangible capital flow, foster inclusive funding practices, and support founders across all stages and demographics. If these challenges are addressed, MENA’s startup ecosystem will continue evolving into a key global innovation hub.