At a time when geopolitical tensions and regional conflicts cast a shadow over the broader landscape, the Middle East and North Africa's startup ecosystem is showing strong resilience and the ability to attract both local and international capital.
Investment in technology is no longer a complementary option, but a strategic bet, driven by accelerating digital transformation and the stability fostered by leading governments in the region.
“The best time to invest and seize opportunities is when there is fear and uncertainty,” Hassan Haidar, founder and managing partner at Plus VC, told Asharq Al-Awsat.
The firm has backed more than 250 startups across 15 countries in the Middle East and said late last year it plans to fund around 40 startups in 2026, with a focus on deals in Saudi Arabia.
Haidar said the technology and digital services sector continues to benefit, adding that even war cannot halt the region’s rapid shift toward digital services.
Regional tensions have pushed many to rely more on digital tools and online delivery services, creating significant opportunities for startups offering innovative solutions, he said.
Venture capital surge
Startups in the region raised $3.8 billion across 688 deals in 2025, up 74% year on year, according to Magnitt company. Saudi Arabia and the United Arab Emirates took the largest share, with nearly half of the capital coming from international investors.
Haidar said investment is driven not only by current opportunities but also by the ecosystem's growing maturity.
“The past decade was about proving that venture capital can succeed in the region; the next decade will be about proving the scale of these opportunities,” he said.
Structural transformation
Haidar, who began investing in the region in 2010, said the startup landscape has changed fundamentally, from fewer than 100 startups annually across the region about 15 years ago to around 2,000 today.
Markets have become more structured, with governments supporting capital flows and helping establish local and international investment funds. Clearer paths to initial public offerings have emerged, alongside secondary transactions that provide liquidity for investors and founders.
“Markets such as Saudi Arabia and the United Arab Emirates have become regional pillars, belief in the ecosystem is attracting founders, capital and global attention,” he said.
Untapped opportunities
Haidar said the region’s appeal lies in vast untapped opportunities and in key sectors that are still in the early stages of digitization. A generation of ambitious founders with international experience is returning to build technology ventures that address both local and global challenges.
This momentum is backed by clear, strategic government support that gives investors confidence, he said.
Compared with other emerging markets, regions such as Southeast Asia face challenges in exit pathways and liquidity shortages. The Arab region, particularly Saudi Arabia, stands out by offering viable exit channels through public listings and structured secondary transactions.
Trends strengthening competitiveness
Haidar outlined four trends boosting the region’s competitiveness.
First, investors are becoming more financially mature, shifting from development-driven funding to performance-based investment focused on real returns.
Second, exit pathways are becoming more dynamic, supported by strong liquidity, with IPOs and secondary markets offering flexible options to recycle capital.
Third, artificial intelligence is moving beyond hype to real-world applications, addressing complex operational challenges in sectors such as logistics and enterprise software.
Fourth, deep tech and hardware are gaining ground, with a new wave of companies developing advanced solutions to critical issues such as energy security, water and advanced manufacturing, attracting investors willing to back long-term projects.
Challenges and outlook
Despite this progress, access to funding remains a structural challenge. Venture capital still accounts for less than 0.1% of regional GDP, compared with around 1% in the United States, highlighting significant untapped potential.
Still, Haidar expressed strong optimism about the region’s ability to move forward, pointing to the role of governments in maintaining stability.
“We hope for a positive shift and a return to normal conditions, but we strongly believe in our governments’ ability to navigate these difficult times and provide a stable environment that gives us the confidence to continue,” he said.
He said venture capital has moved beyond the stage of doubt.
“We are no longer asking whether startups are important to our economy; we have entered a new strategic phase focused on how to scale and multiply, and on proving the full potential of this ecosystem on the global stage,” he said.
