Moh Badawy, Author at Mohammed Badawy

While mega-deals dominate headlines, early-stage activity is accelerating.

In Q2 2025, early-stage startups recorded 67 deals; across April–May 2025 according to Wamda, MENA startups raised about US$517.4 million in 70 deals across all stages, according to Lucidity Insights.

Investors are backing pipelines over proven scale. That signals confidence in founder quality and market opportunity.

Saudi Arabia’s early-stage programs: Monsha’at, GAIA, accelerators backed by SVC cumulative impact: 54 SVC-backed funds have invested in over 800 startups and SMEs to date according to Magnitt, reflecting sustained early-stage support.

According to Magnitt, Saudi Arabia’s venture market hit a funding peak in 2023 at 1.343 billion dollars, then fell to 750 million dollars in 2024, a drop of about 44 percent. Deal count moved the opposite way, rising to 178 in 2024, the highest in the series. The mix flipped toward smaller checks. In 2024 mega rounds contributed 130 million dollars while rounds under 100 million delivered 620 million dollars, about 83 percent of the total. Compare that with 2023 when mega rounds were 879 million dollars and dominated the year.

That means more deals with fewer headline dollars point to valuation discipline and capital spreading across many seeds and Series A rounds. It suggests a wider pipeline forming now with potential conversion into larger growth rounds over the next couple of years.

Early-stage funding in UAE climbed modestly in 2025, while Egypt topped May (with large rounds lifting totals), indicating resilient early-stage participation despite macro volatility.

The ecosystem is building depth, not just unicorns. More founders, more angel investors, more repeat entrepreneurs create compounding effects over time.

Early-stage capital availability determines the next cohort of growth-stage companies. MENA’s deal count suggests a healthy pipeline is forming.

Investors are spreading bets across sectors; fintech, healthtech, logistics, SaaS, climate tech, rather than concentrating in one vertical.

Founders should prioritize capital efficiency and verifiable traction before Series A, aligning milestones with the more disciplined deployment environment.

Wamda’s Investment Breakdown by country graph shows that in H1 2025 MENA startups raised 2.1 billion across 334 deals. Saudi Arabia captured 1.3 billion about 62 percent and the UAE 541 million about 26 percent with Egypt at 179 million about 9 percent. By deal count the UAE led with 114 followed by Saudi Arabia with 98 and Egypt with 52 which together made up 79 percent of all deals. Most other markets recorded single digit millions, showing a long tail.

Sources:

Source 1

MENA Startup Funding Hits US$2.1 Billion in H1 2025:
https://fintechnews.ae/27046/fintech/mena-startup-funding-h1-2025

Source 2

MENA Startup Funding: $517M in Apr–May 2025:
https://lucidityinsights.com/infobytes/mena-startup-funding-trends-apr-may-25

Source 3

MENA Startup Funding – In-Depth Analysis & Forecast (Apr–May 2025):
https://lucidityinsights.com/infobytes/mena-startup-funding-apr-may-25

Source 4

Saudi Venture Capital Co. invests $1bn, strengthening the VC landscape (54 funds; 800+ startups/SMEs):
https://www.arabnews.com/node/2589135/business-economy

Source 5

MENA Startups Raise $289M in May as Egypt Leads:
https://fintechnews.ae/26475/fintech/mena-startup-funding-may-2025

Source 6

MENA VC Funding Hits $1.5B in H1 2025, Strongest First Half Since 2022:
https://magnitt.com/news/mena-vc-funding-hits-1-5b-in-h1-2025-strongest-first-half-since-2022-54003

Embedded finance is no longer experimental in MENA. It has become the dominant financing model for growth. MAGNiTT data shows fintech attracted $596 million across 93 deals in H1 2025, roughly tripling year-on-year while global fintech funding contracted.

Fintech’s $1.3 billion share of the region’s $2.1 billion total H1 2025 investment, according to Wamda, underscores its centrality to capital deployment across all market stages.

The Saudi Central Bank’s Open Banking framework and the UAE’s Payment Services Regulations now operate as core infrastructure for growth. Builders who align early with these rules move faster, face fewer surprises, and unlock partnerships that last.

Recent rounds confirm the direction. Tabby raised $160 million in H1 2025, anchoring late-stage fintech growth. Tamara secured a $2.4 billion debt facility, demonstrating that mature platforms can access non-dilutive capital at scale.

The shift is broader than payments. B2B compliance and operational software gained traction as regulatory mandates expanded; governments became direct buyers of digital solutions, pulling startups into mission-critical workflows.

Vertical fintech wins when compliance becomes product strength. Buy-now-pay-later platforms that integrate regional payment rails and regulatory requirements (like Sharia-compliance structures in some jurisdictions) build customer trust in ways pure consumer software alone cannot match. That trust compounds into retention and better unit economics.

Capital follows certainty. In MENA that certainty now exists in payments, lending, and digital wallets. Choose embedded finance over standalone apps. Treat regulatory alignment as core IP. Expand when local banks shift from rival to partner. This is how durable fintech franchises are built in the region today.

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Mohammed Badawy

All posts by : Moh Badawy

Early-Stage Deal Flow Strengthens

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Embedded Finance Becomes the Default Path to Scale

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