RIYADH: According to MAGNiTT, MENA venture funding in the Middle East and North Africa showed signs of increased strain in the first half of 2026. Startup investment fell 22% year over year to $1.35 billion, while the number of deals fell 41% to 214 transactions, the lowest half-year total since at least 2022.
The increasing concentration of capital among fewer companies, rather than the reduction in capital, was the more acute warning flag. According to MAGNiTT’s “State of Venture Capital: H1 2026 Review” report, two mega-rounds totaling $480 million mitigated the headline fall, and the top ten transactions accounted for 58% of all fundraising during that time.
The first-half results indicate that the entire impact of regional violence and tighter cross-border capital flows might not be apparent until the third quarter, according to the Dubai-based venture data platform. Although funding remained relatively constant between the first and second quarters, at $679 million and $667 million, respectively, the number of agreements decreased to 90 in the second quarter—the lowest quarterly total in the currently available data series.
According to Philip Bahoshy, the founder and CEO of MAGNiTT, a large portion of the capital deployed in the first half most likely came from deals that were already in motion six to nine months ago, thus headline funding metrics do not accurately reflect the underlying slowdown.
Early-stage activity, the most accurate indicator of ecological appetite, is the sharper signal, and it has significantly slowed. This is similar to what happened in 2020: steadiness in the first half, followed by a change in the third quarter, he continued.
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