Startup funding in the Middle East and North Africa (MENA) region fell sharply in October. Startups in the region raised $784.9 million, which marked a major drop of about 77 percent from September, when funding reached nearly $3.5 billion. This decline created concerns about market sentiment, investor confidence, and liquidity. However, the numbers also showed some underlying strength when compared to last year.
Despite the drop from September, funding still climbed 395 percent higher than October of last year. This rise came mainly because a few large deals boosted the totals. So, the market did not collapse completely. Instead, it adjusted after an unusually strong month in September.
Debt Financing Dominated October Deals
Most of the funding in October came from debt financing. Startups secured around $567.8 million in debt, which accounted for nearly 72 percent of the total funding. Equity financing and other instruments together brought in only about $217 million.
This heavy dependence on debt signaled a shift in strategy. Many startups chose debt to avoid giving away large equity stakes. Some investors also preferred structured debt during uncertain conditions instead of traditional equity. This approach brought capital without changing ownership too much, but it also increased repayment pressure on startups.
Country-Wise Breakdown of Startup Funding
The United Arab Emirates took the lead in October. Startups based in the UAE raised around $615.7 million across fifteen deals. One large deal in the property technology sector contributed most of this funding. This single transaction shaped the overall regional numbers.
Saudi Arabia followed with $119.3 million from fifteen deals. Startups in Saudi Arabia continued to draw interest because of strong government support, national innovation policies, and active local investors.
Egypt secured around $33.3 million from five deals. Egypt showed slower progress in October, but investors still saw potential in its young population and growing digital economy.
Morocco also appeared in the list with about $12.3 million across three deals. Even though the amount looked small compared to the UAE and Saudi Arabia, Morocco continued to gain attention as a rising startup hub in North Africa.
Sector Performance: Property Tech Leads Strongly
The property technology sector dominated the month. Property Finder, a leading company in the UAE, raised a very large debt-funded round that made up a significant portion of the total regional funding. Property-tech alone received around $526 million in October.
Software-as-a-Service (SaaS) companies raised about $60 million. These companies built digital products and software tools for businesses and individuals.
The gaming sector saw one major deal worth around $41.6 million. This showed growing investor interest in entertainment, gaming content, and digital experiences.
Fintech recorded the highest number of deals—seven transactions—but only raised around $12.5 million in value. This gap between deal count and funding size showed investor caution in the financial technology sector, especially for early-stage startups.
Early-Stage vs. Late-Stage Funding
Early-stage funding remained strong in October. Startups in seed stages, Series A, and grant rounds closed 32 deals and raised about $95.2 million. Investors still believed in fresh ideas and new talent.
Late-stage funding slowed down dramatically. Only one Series B deal took place, worth about $50 million. Growth-stage startups found it more difficult to secure large investments, which showed caution from investors dealing with global economic uncertainty, high interest rates, and geopolitical tension.
This trend suggested that investors preferred smaller early-stage risks rather than large bets on maturing companies. The shortage of Series B and later rounds could slow expansions and scaling plans for many startups in the region.
Gender Funding Gap Remains Wide
Male-led startups secured around 93 percent of the total funding in October. Startups founded by women raised only around $4.5 million across three deals. Mixed-gender founding teams secured about $51 million.
This gap showed that female founders still struggled to access venture capital, despite the region’s progress in entrepreneurship and innovation. The lack of equal funding limited diversity in innovation and slowed economic inclusion.
Why the Drop Happened
Several reasons contributed to the sharp decline from September:
- A few extremely large deals in September pushed the funding total to almost $3.5 billion. October did not repeat such mega-deals.
- Debt financing replaced equity deals in many cases. Large debt rounds shifted the funding structure but did not reflect a broad increase in venture capital activity.
- Investors acted more carefully because of global inflation, rising interest rates, and ongoing conflicts in the region.
- Many startups focused on debt instead of equity to protect ownership, but this choice also raised financial risks.
Signals of Strength Beneath the Surface
The year-on-year jump of 395 percent showed that investor interest did not disappear. The October funding numbers looked smaller only when compared to September’s unusual spike. Early-stage activity stayed alive, and more than thirty deals closed at seed and Series A stages.
Countries like the UAE and Saudi Arabia continued to lead in innovation, policy support, and large transactions. Egypt and Morocco also showed steady growth, even if the amounts remained modest.
Sector diversity remained healthy. Property-tech, SaaS, fintech, gaming, logistics, and e-commerce startups all attracted attention. This variety reflected the region’s ability to innovate beyond oil and traditional industries.
What This Drop Means for Startups and Investors
Startups now need clear business models, strong revenue plans, and disciplined spending to win investor trust. Debt brings quick capital but also demands timely repayment. Companies must balance growth ambitions with responsible financial planning.
Investors now examine due diligence more carefully and focus on profitability over rapid expansion. Capital flows still exist, but startups must prove real value and long-term potential.
Governments in the region continue to support entrepreneurship through funding programs, innovation hubs, and regulatory reforms. These efforts can soften the impact of global economic pressures.
Looking Ahead
The decline in funding in October does not signal collapse. Instead, it shows a recalibration after a surge in September. The shift from equity to debt financing, fewer growth-stage deals, and ongoing gender imbalance reflect deeper structural issues that the region must address.
The MENA startup ecosystem still holds promise. Strong early-stage activity, government backing, and international investor interest provide a solid foundation. However, startups must adapt, remain efficient, and focus on sustainable growth.
If the region reduces dependency on a few mega-deals and supports diverse founders across all stages, it can build a more resilient and balanced startup environment in the coming months.
Also Read – GPT-Powered Business Ideas: Transforming Innovation into Profits