Sharp Decline in MENA Startup Funding in June 2025
The Middle East and North Africa (MENA) startup ecosystem saw a significant drop in funding during June 2025, with total investments reaching only $52 million across 37 deals.
This marks a steep 82% decline compared to the previous month and a 55% drop year-on-year, representing one of the region’s sharpest funding slowdowns in the first half of 2025.
This decline comes amid growing investor caution due to global economic uncertainty, with around 40% of June’s funding structured as debt, reflecting investors’ hesitancy to commit equity capital during volatile market conditions.
Funding Distribution by Country
The United Arab Emirates (UAE) reclaimed its leading position, with 13 startups raising $37 million, representing over 70% of the region’s total funding for the month. This marks a notable shift from May 2025, when Egypt led in funding volumes.
Egypt came in second, raising $6 million across six deals, while Tunisia made a strong appearance in the top three, supported by a $3.5 million seed round by water technology startup Kumulus. This positioned Tunisia ahead of Saudi Arabia, which recorded $3 million across six deals, reflecting a slowdown in one of the region’s traditionally active markets.
Funding Distribution by Sector
Fintech maintained its lead in the region, attracting $38 million across 10 deals, demonstrating continued demand for financial technology solutions.
Cleantech sustained its momentum, primarily supported by the Kumulus deal, while Web3 startups secured $2 million across two rounds, indicating cautious but ongoing interest in blockchain-enabled business models.
Other sectors, including regtech, proptech, SaaS, and autotech, recorded lower funding volumes, reflecting a preference among investors for established verticals amid the broader funding pullback.
Focus on Early-Stage Funding
Early-stage investments continued to attract notable activity, with seed and pre-seed rounds accounting for over $15 million across 19 deals.
Late-stage funding remained limited, indicating investors’ focus on foundational growth while maintaining caution amid global market recalibration.
Challenges and Resilience in the MENA Startup Ecosystem
The decline in funding in June should not be viewed as a sign of structural weakness in the startup ecosystem.
Monthly funding volumes for startups in the Middle East can fluctuate significantly depending on the presence or absence of large funding rounds.
Therefore, it may be misleading or inaccurate to consider a single month’s funding decline as a sufficient indicator of a general trend in startup funding across the region. Supporting this analysis is the deal recorded on July 9, where XPANCEO successfully raised $250 million.
