The venture capital landscape across the Middle East and North Africa experienced a notable contraction in February 2026, with startups raising a total of $326.6 million across 62 deals. According to a new report from Wamda and Digital Digest, this figure represents a significant slowdown in investment activity for the region.
The capital deployed was down 42% compared to January 2026 and reflected a 38% decrease from the same period last year, signaling a more cautious investment climate.
A Shift Towards Early-Stage Investments
The downturn in total funding is largely attributed to a market shift towards smaller, early-stage deals and a distinct absence of the mega-rounds that have previously boosted monthly totals. This trend suggests investors are focusing on nurturing nascent companies rather than injecting large sums into mature-stage startups.
The majority of the capital raised was equity-based, with debt financing constituting only 16% of the total investment pie for the month.
UAE and Saudi Arabia Dominate Funding Landscape
The UAE maintained its position as the region’s leading hub for startup investment, with its companies securing $162.8 million across 23 deals.
Saudi Arabia followed, demonstrating a high volume of activity with 25 startups raising a combined $87.7 million. Egypt’s ecosystem also showed resilience, with six startups closing deals worth a total of $64 million.
Fintech Leads Sector Investments
Fintech continued to be the most attractive sector for investors, attracting $94.7 million across 14 separate deals. The e-commerce and retailtech sector came in second, raising $52 million in just three deals, while deeptech captured significant interest with $51 million raised across two deals.
A clear preference for business-to-business (B2B) models was evident, with B2B startups raising $137 million compared to just $62 million for their business-to-consumer (B2C) counterparts.
Funding Disparity Persists for Female Founders
The report highlighted a stark gender gap in funding allocation for February. All capital raised during the month was directed towards male-led or mixed-gender founding teams. Notably, no startups founded solely by women secured any investment, underscoring a persistent challenge within the regional ecosystem.
About Wamda
Wamda is a leading entrepreneurship ecosystem enabler in the Middle East and North Africa region. It accelerates, inspires, and invests in entrepreneurs through its platform, programmes, and venture capital fund. Wamda is a key source of data, insights, and news for the regional startup community, providing valuable resources for founders, investors, and stakeholders.
Source: Zawya
